<PAGE> FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 1993
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From _________ to _________
Commission File Number 1-1105
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
A NEW YORK I.R.S. EMPLOYER
CORPORATION NO. 13-4924710
32 Avenue of the Americas, New York, New York 10013-2412
Telephone Number 212-387-5400
Securities registered pursuant to Section 12(b) of the Act: See attached
SCHEDULE A.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes.....x... No..........
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (X)
At February 28, 1994, the aggregate market value of the voting stock held
by non-affiliates was $71,183,656,635.
At February 28, 1994, 1,356,931,753 common shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's annual report to security holders
for the year ended December 31, 1993 (Part II)
(2) Portions of the registrant's definitive proxy statement dated
March 1, 1994, issued in connection with the annual meeting of
shareholders (Part III)
<PAGE>
SCHEDULE A
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Shares # New York, Boston, Midwest,
(Par Value $1 Per Share) ## Philadelphia and Pacific Stock
# Exchanges
#
Two Year Fixed/Floating Rate Notes, #
due May 4, 1995 #
#
Three Year 4-1/2% Notes, #
due February 15, 1996 #
#
Thirty-Four Year 4-3/8% Debentures, #
due October 1, 1996 #
#
Thirty-Seven Year 4-3/4% Debentures, #
due June 1, 1998 #
#
Thirty-Six Year 4-3/8% Debentures, #
due May 1, 1999 #
#
Thirty-Three Year 6% Debentures, #
due August 1, 2000 #
#
Thirty-Five Year 5-1/8% Debentures, ## New York Stock Exchange
due April 1, 2001 #
#
Ten Year 7-1/8% Notes, #
due January 15, 2002 #
#
Thirty Year 8-1/8% Debentures, #
due January 15, 2022 #
#
Thirty-Two Year 8-1/8% Debentures, #
due July 15, 2024 #
#
Forty Year 8-5/8% Debentures, #
due December 1, 2031 #
#
<PAGE>
TABLE OF CONTENTS
PART I
Item Description Page
1. Business ........................................................ 1
2. Properties ...................................................... 14
3. Legal Proceedings ............................................... 15
4. Submission of Matters to a Vote of Security Holders ............. 15
PART II
Description
5. Market for Registrant's Common Equity and Related Stockholder
Matters ....................................................... 17
6. Selected Financial Data ......................................... 17
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations ......................................... 17
8. Financial Statements and Supplementary Data ..................... 17
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ...................................... 17
PART III
Description
10. Directors and Executive Officers of the Registrant .............. 17
11. Executive Compensation .......................................... 17
12. Security Ownership of Certain Beneficial Owners and Management .. 17
13. Certain Relationships and Related Transactions .................. 17
PART IV
Description
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 18
See page 16 for "Executive Officers of the Registrant."
<PAGE>
PART I
Item 1. Business.
GENERAL
American Telephone and Telegraph Company ("AT&T" or "Company") was
incorporated in 1885 under the laws of the State of New York and has its
principal executive offices at 32 Avenue of the Americas, New York, New
York 10013-2412 (telephone number 212-387-5400).
AT&T is a major participant in two industries: the global information
movement and management industry and the financial services and leasing
industry.
In the global information movement and management industry, the
Company's services and products include: voice, data and image
telecommunications services that can be used with the telecommunications
and information products or systems of AT&T and others; telecommunications
products and systems, ranging from voice instruments to complex network
switching and transmission systems; computer products and systems; products
which combine communications and computing; installation, maintenance and
repair services for communication and computer products; optical fiber and
cable; and components for high-technology products and systems. The
above-described services and products are designed to meet the needs of
broad categories of customers: the users of telecommunications and
information services, including residential, business and government
customers; the providers of telecommunications and information services,
including telephone companies and other telecommunications agencies around
the world; and the manufacturers of telecommunications, data processing and
other electronic equipment.
In the financial services and leasing industry, the Company provides
direct financing and finance leasing programs for its own products and the
products of other companies, leases products to customers under operating
leases, and is in the general-purpose credit card business.
AT&T markets its services, products and systems throughout the United
States. It also markets many of its services, products and systems outside
of the United States.
The Company sells its services and products directly to all types of
customers through its own direct sales force. The Company also sells
certain of its products to distributors and other intermediaries who may
resell these products to others. Some of the Company's services are also
sold to businesses that resell them, usually in conjunction with other
services, to others.
For information about the Company's industry and geographic segments,
see Note 16 to the Consolidated Financial Statements. Such information is
incorporated herein by reference, pursuant to General Instruction G(2).
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AGREEMENT WITH MCCAW CELLULAR COMMUNICATIONS, INC.
On August 16, 1993, AT&T and McCaw Cellular Communications, Inc.
("McCaw") entered into a definitive agreement to merge McCaw and a
subsidiary of AT&T, making McCaw a wholly owned subsidiary of AT&T (the
"Merger").
In the Merger, each share of McCaw's Class A and Class B common stock
will be converted into one share of AT&T common stock. However, if the
average of the last reported sales price on the New York Stock Exchange for
the 20 most recent trading days ending on the fifth day prior to the date
of the closing of the Merger (the "Closing Date Market Price") of one share
of AT&T common stock is less than $53 per share, the conversion ratio will
be adjusted upward to provide shares of AT&T common stock having an
aggregate market price of $53 for each share of McCaw common stock, subject
to a maximum of 1.111 shares of AT&T common stock. If the Closing Date
Market Price of one share of AT&T common stock is greater than $71.73 per
share, the conversion ratio will be adjusted downward to provide shares of
AT&T common stock having an aggregate market price of $71.73 for each share
of McCaw common stock, subject to a minimum of .909 of a share of AT&T
common stock.
Pursuant to a separate agreement, AT&T has granted McCaw the right, in
the event the Merger does not close, to require AT&T to purchase from McCaw
$600 million of McCaw's Class A common stock at a price of $51.25 per
share.
The Merger is subject to a number of conditions, including the receipt
of regulatory approvals, expiration of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act (the "HSR Act"), receipt of
opinions that the Merger will be tax free and will be accounted for as a
pooling of interests, and McCaw stockholder approval. McCaw stockholders
holding a majority of the voting power of the McCaw common stock, including
members of the McCaw family and British Telecommunications plc, have agreed
to vote in favor of the Merger.
Regulatory Approvals
HSR Act and Antitrust. AT&T and McCaw must observe the notification
and waiting period requirements of the HSR Act before the Merger may be
consummated. The HSR Act provides for an initial 30-calendar day waiting
period following the filing with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the U. S. Department of Justice (the
"Antitrust Division") of certain Notification and Report Forms by the
parties to the Merger and certain other parties. The HSR Act further
provides that if, within the initial 30-calendar-day waiting period, the
FTC or the Antitrust Division issues a request for additional information
or documents, the waiting period will be extended until 11:59 p.m. on the
twentieth day after the date of substantial compliance by the filing
parties with such request.
On September 22, 1993, AT&T and McCaw each received an extensive
request from the Antitrust Division for additional information and
documents with respect to the Merger and the telecommunications industry.
Accordingly, the waiting period under the HSR Act has been extended and
will not expire until the twentieth calendar day after AT&T and McCaw have
each substantially complied with such request for additional information
and documents. Each of AT&T and McCaw is responding to the request as
rapidly as practicable but cannot predict when substantial compliance will
be achieved.
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On December 2, 1993, BellSouth Corporation ("BellSouth") filed a
motion in the case entitled United States v. Western Electric Co. Inc. et
al., Civil Action No. 82-0192, for a declaratory ruling that the Merger
would violate Section I(D) of the Modification of Final Judgment (the
"Decree"), United States v. American Tel. and Tel. Co., 552 F. Supp. 131,
266-34 (D.D.C. 1982), aff'd mem. sub. nom Maryland v. United States, 450
U.S. 1001 (1982) and cannot be consummated without a modification of the
Decree. On January 5, 1994, the U.S. Department of Justice filed a
response that supported BellSouth's contention that a waiver of the Decree
is required. On January 27, 1994, AT&T filed for a determination that a
waiver is not required under the Decree or, in the alternative, for waiver
of any relevant Decree provisions. AT&T and McCaw believe that BellSouth
is not entitled to the relief sought but that a waiver, if necessary, can
be obtained. There can be no assurance that AT&T will prevail with respect
to the BellSouth challenge or any other challenge to the Merger that may be
made on antitrust grounds.
FCC. On August 23, 1993, AT&T and Craig O. McCaw filed various
applications seeking consent of the FCC to the proposed transfer of control
of radio licenses held by McCaw to AT&T, which consent is required prior to
consummation of the Merger. The FCC has issued public notices concerning
these applications and has established a schedule, pursuant to which
(i) interested parties were permitted to petition to deny the applications
by November 1, 1993, (ii) responses to those petitions were due by
December 2, 1993 and (iii) replies to such responses were due by
January 18, 1994.
Various petitions, responses and replies have been filed and the
matter is now pending before the FCC. There can be no assurance that the
FCC will give such consent.
State Governmental Authorities. Pursuant to various applicable
statutes, AT&T and McCaw were required to file applications with nine state
regulatory commissions seeking approval and/or a statement of non-
opposition to the Merger. Such applications were filed in Alaska,
California, Hawaii, Louisiana, Maine, New York, Nevada, Ohio and West
Virginia. The commissions of all of the foregoing states, except
California, have approved the applications or issued statements of non-
opposition; the California application is still pending.
In December 1993, AT&T and McCaw entered into a settlement agreement
(the "California Settlement") with all of the original opposing parties in
California regarding the provision of cellular and interexchange services
to customers in California. However, there are no assurances that the
California commission will approve the California Settlement, or, if
approved, when such approval will be granted. There also can be no
assurance that additional challenges will not be made or that, if such a
challenge is made, AT&T and McCaw will prevail.
GLOBAL INFORMATION MOVEMENT AND MANAGEMENT
To meet the needs of its customers and the demands of the complex and
rapidly changing information movement and management industry, AT&T
maintains business units that develop, engineer, market, and maintain
telecommunications services and business units that develop, manufacture,
market, provide, install and service information movement and management
products and systems.
<PAGE>
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To better serve the needs of customers, AT&T's businesses are
clustered into functional groups as follows:
Communications Services Group
The Communications Services Group addresses the needs of large and
small businesses, the Federal government, state and local governments and
consumers for voice, data and image telecommunications services. Business
units within this group provide regular and custom long distance
communications services, including message telecommunications services
("MTS"), wide area telecommunications services ("WATS"), satellite
transponder services, AT&T EasyReach# 700 services, toll-free or 800
services, 900 services, private line services, Software Defined Network
services ("SDN"), and integrated services digital network ("ISDN")
technology based services. They also provide special long distance
services, including AT&T Calling Card services and special calling plans
and the Company's domestic and international operators. AT&T provides
communications services internationally, including transaction services,
global networks, network management and value added network services (i.e.,
services offered over communications transmission facilities that employ
computer processing applications) and sells and maintains submarine cable
systems.
AT&T provides interstate and intrastate long distance
telecommunications services throughout the continental United States and
provides, or joins in providing with other carriers, interstate
telecommunications services to and from Alaska, Hawaii, Puerto Rico and the
Virgin Islands and international telecommunications services to and from
virtually all nations and territories around the world.
In the continental United States, AT&T provides long distance
telecommunications services over its own network. Virtually all switched
services are computer controlled and digitally switched and interconnected
by a packet switched signaling network. Transmission facilities consist of
approximately 2 billion circuit-miles using lightwave, satellite, wire and
coaxial cable and microwave radio technology. International
telecommunications services are provided via multiple international
transoceanic submarine cable (primarily lightwave) systems and via
international satellite and radio facilities.
AT&T is subject to the jurisdiction of the Federal Communications
Commission ("FCC") with respect to interstate and international rates,
lines and services, and other matters. For many years prior to July 1,
1989, the system of regulation used by the FCC for AT&T was rate-of-return
regulation. Effective July 1, 1989, the FCC adopted a new system of
regulating AT&T known as "price caps" under which AT&T's prices, rather
than its earnings, are limited. The FCC decided in June 1993 to continue
price caps for residential services instead of reducing regulation of AT&T.
____________
# Registered service mark of AT&T
<PAGE>
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AT&T's intrastate telecommunications services are subject to
regulation in many states by public service commissions or similar state
authorities having regulatory power over intrastate rates, lines and
services and other matters. The system of regulation used in many states,
at least for some of AT&T's services, is rate-of-return regulation. In
recent years, recognizing the competitive nature of AT&T's services, many
states have adopted different systems of regulation, such as: complete
removal of rate-of-return regulation, pricing flexibility rules for some or
all of AT&T's services, price caps, and incentive regulation.
AT&T Global Information Solutions Company
AT&T Global Information Solutions Company ("AT&T GIS" formerly known
as NCR Corporation) develops, manufactures, markets, supports and services
business information systems for worldwide markets. AT&T GIS's services
and products consist of: industry-specific products, including
industry-specific workstations and processors for retail, financial,
manufacturing, and other markets; small computer systems and workstations,
including small servers, personal computers, office automation
workstations, and video display workstations; mid-range computer systems,
including workgroup servers, small, medium and large departmental servers,
and systems for interactive and batch processing; large computer systems
for on-line transaction processing, decision support, and batch processing;
imaging systems; communication processors which process information between
large computer systems and a variety of data communication devices such as
terminals; and synergistic products and services, including semiconductors,
data centers, field engineering, software services, business forms and
supplies, and education.
Multimedia Products and Services Group
The Multimedia Products and Services Group addresses the equipment
needs of large and emerging businesses, the Federal government, state and
local governments, international distributors and consumers. Business
units in this group offer products such as private branch exchanges
("PBXs") including the Definity* communications system, voice processing
systems and voice messaging systems including the AUDIX* and Conversant*
systems, electronic mail, electronic data interchanges and enhanced
facsimile services through AT&T EasyLink* services, video conferencing
systems, installations, maintenance and repair services and other business
communications systems, corded and cordless telephones, cellular
telephones, answering systems, security systems, facsimile machines,
modems, multiplexers, data transceivers, the Merlin* and Partner*
communications systems, videophone, and imaging and personal communicator
products.
The Multimedia Products and Services Group also includes AT&T Ventures
Corporation. AT&T Ventures Corporation, a wholly owned subsidiary of AT&T,
is an internal venture capital business. The mission of this organization
is to identify and nurture new markets for the application of
AT&T-developed technologies. AT&T Ventures Corporation creates and grows
new businesses in markets not addressed by existing business units.
On June 14, 1993, AT&T exchanged its 77% interest in UNIX System
Laboratories for approximately 3% ownership of Novell, Inc., a leading
software development company.
____________
* Registered trademark of AT&T
<PAGE>
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Network Systems Group
The Network Systems Group includes business units that primarily
manufacture, market, engineer, install and maintain switching systems,
transmission systems, cable and wire products, cellular systems, and
operations systems for AT&T, local exchange carriers, other carriers,
private businesses, government agencies, overseas telephone administrations
and others. Switching systems include the 5ESS* switch; transmission
systems include lightwave and digital radio products, digital cross connect
and multiplex products, and digital loop carrier products; cable and wire
products include optical fiber, copper and optical fiber cable and related
apparatus; and operations systems include mechanized systems for managing
telecommunications networks.
The Network Systems Group also includes AT&T Microelectronics, a
business unit that produces three broad categories of components:
integrated circuits, photonics and other electronic components such as
discrete components, power systems and printed wiring boards, which are
included in most AT&T products and systems. Certain of these components
and many other specially designed components are sold commercially to other
companies.
International
In 1993, the WorldPartners alliance was formed by AT&T, Kokusai
Denshin Denwa Company, Ltd of Japan and Singapore Telecommunications to
provide global companies with a new level of service and convenience.
WorldPartners expects to be joined by Australia's long distance company
Telstra, Unitel of Canada, Korea Telecom, and others, including European
partners.
AT&T has numerous subsidiary companies and offices throughout the
world. In 1993, AT&T announced its intention to implement an international
organizational structure, along regional lines, to complement the
functional groups described above and to promote shared accountability
between regional units and those groups. Three regional units,
representing all AT&T businesses, are being formed: Latin America, with
headquarters in Coral Gables, Florida; Asia/Pacific, with headquarters in
Hong Kong; and Europe/Middle East/Africa, with headquarters in Brussels.
AT&T has established a number of international alliances, ventures and
manufacturing facilities. Among these alliances, ventures and
manufacturing facilities are the following:
Asia/Pacific Region
AT&T owns 60% of AT&T Taiwan Telecommunications Co., Ltd., a joint
venture with the Taiwanese government and others in Taiwan which
manufactures switching and transmission systems.
AT&T owns approximately 15% of United Fiber Optic Communications Inc.,
a venture with Pacific Electric Wire and Cable Ltd., Chiao Tung Bank and
others in Taiwan which manufactures fiber cable and transmission equipment.
AT&T owns AT&T Telecommunications Products (Thai) Ltd., a Thai company
which manufactures telephones.
____________
* Registered trademark of AT&T
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AT&T owns semiconductor assembly and test facilities and telephone
manufacturing facilities in Singapore and a manufacturing facility on Batam
Island, Indonesia which produces cordless telephones.
AT&T owns 80% of AT&T Software Japan, Ltd., a joint venture with
Industrial Bank of Japan and Software Research Associates, which provides
software development.
AT&T owns approximately 60% of AT&T Jens Corporation, a joint venture
with 22 major Japanese companies which provides value added network
services.
AT&T owns 44% of a joint venture with the Goldstar group of the
Republic of Korea which manufactures and markets switching products.
AT&T, through joint ventures, operates manufacturing facilities in the
People's Republic of China for the production of copper and fiber cable,
switching systems, and transmission equipment.
Europe/Middle East/Africa Region
AT&T owns AT&T ISTEL Limited, a United Kingdom based company, which
owns numerous subsidiaries, that manufactures software and provides
software related services.
AT&T Network Systems International B.V. is a joint venture between
AT&T International Inc., which owns approximately 94% of the equity and
Compagnia Telefonica Nacional de Espana, the national telephone company of
Spain, which owns approximately 6%. It designs, develops, manufactures and
markets Network Systems' products in Europe and elsewhere. In addition,
the joint venture itself has established businesses and participates in
joint ventures in a number of countries, including: the Netherlands,
Belgium, the People's Republic of China, the Czech Republic, France,
Germany, Ireland, Italy, Poland, the Russian Federation and Kazakhstan.
AT&T owns 20% of Societa Italiana Telecommunicazioni S.p.A.
("Italtel"), a subsidiary of STET-Societa' Finaziaria Telefonica-per Azioni
("STET"), a telecommunications holding company controlled by the government
of Italy, which manufactures and sells telecommunications equipment. AT&T
and STET have entered into a cooperation agreement involving the
development and marketing of certain public and private telecommunications
equipment for Italy, other European countries, the United States and
certain other markets.
AT&T owns Gretag Data Systems AG, a Swiss company that manufactures
security-encryption equipment for the financial market.
AT&T owns 19.5% of UTEL, a Ukrainian joint venture company with PTT
Telecom and the Ukrainian State Committee of Communications, which provides
services and products to improve Ukraine's domestic and international
telecommunications services.
AT&T owns AT&T Wireless Communications Products Limited (formerly
"Shaye Communications Limited"), a United Kingdom company engaged in
research, development and marketing of products for the ultra low power,
portable, radio-based telecommunications market.
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AT&T owns in excess of 90% of Barphone S.A., a French company engaged
principally in the development, design, manufacture and marketing of small
PBXs and related equipment.
AT&T owns 75% of LYCOM A/S, a Danish company engaged principally in
the manufacture of optical fiber.
AT&T owns 50% of A/O Telmos, a Russian joint venture company with
Moscow City Telephone Company which will own and operate a subscriber
network in Moscow.
AT&T owns various controlling interests in joint ventures in the Czech
Republic, Hungary, Poland and the Slovak Republic which market key systems,
PBXs and related equipment.
AT&T owns AT&T Microelectronica de Espana S.A., a Spanish company
which manufactures integrated circuits.
In addition, AT&T, through joint ventures, operates manufacturing
facilities in Ireland, Korea, the People's Republic of China, Taiwan and
Thailand.
Latin America Region
AT&T owns four manufacturing companies in Mexico. One company
manufactures microelectronics products, a second company produces telephone
answering machines, a third company is being converted to manufacture
corded telephones and a fourth company repairs various items of AT&T's
consumer products business unit.
AT&T owns 51% of AT&T Elecon Telesistemas C.A., a Venezuelan joint
venture with Electra Finance, which manufactures copper cable for the
Venezuelan market.
AT&T owns 5% of VenWorld Telecom, C.A., a Venezuelan joint venture
company with GTE Corporation and three Venezuelan corporations, which owns
40% of the Venezuelan Post Telephone and Telegraph Company ("PT&T"),
Compania Anonima Nacional Telefonos de Venezuela ("CANTV").
Canada
AT&T owns 20% of Unitel Communications, Inc., a Canadian long distance
carrier.
AT&T Bell Laboratories
AT&T Bell Laboratories provides support to all business units. It
designs and develops new products, systems, software and services, and
carries out a broad program of fundamental research, to provide the
technology base for AT&T's future.
AT&T Bell Laboratories has made significant contributions to
information science and technology since its founding in 1925. These
contributions include the invention of the transistor, the development of
the nationwide microwave radio network, and the design and development of
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integrated circuits and many types of lasers. Areas of AT&T Bell
Laboratories research and development work in recent years include
lightwave transmission, which offers greater transmission capacity than
other transmission systems; electronic switching technology, which enables
faster call processing, increased reliability and reduced network costs;
and microelectronics components, which bring the latest advantages of scale
of integration to the full range of products offered by AT&T.
Other advances achieved by AT&T Bell Laboratories include: the
development of the Karmarkar Algorithm, a mathematical optimization
technique which is being applied to the efficient layout of AT&T's long
distance telecommunications network; the development of optical amplifiers
that dramatically increase the distance messages can be transmitted
optically before they must be reamplified, and the invention of a
self-electro optic effect device ("SEED") useful for optical storage,
optical switching and optical logic, thus advancing the future of photonic
technologies; the development of polysilicon memory structures widely used
in dynamic random access memories ("DRAMS"); the development of speech
recognizers which provide for the human control of complex systems with
verbal commands; and improvements to AT&T's ACCUNET* T1.5 service (a
wideband, all-digital, customer-dedicated service that combines voice, data
and video communications) that permit customer control of reconfigurations.
AT&T Bell Laboratories also undertakes the architectural effort
required to see that AT&T products can be integrated within a framework of
national and international standards. An emphasis on use of the UNIX@
Operating System, "C" language and other software suited to open
architecture and easy connectivity facilitates this architectural effort.
AT&T Bell Laboratories has also made significant contributions to the
efficient coding of television pictures and to wireless communications
technology.
In order to increase focus on customers and to create more nimble
organizations, much of the AT&T Bell Laboratories systems engineering and
development resource has been more formally aligned with business units.
The newly aligned organizations remain AT&T Bell Laboratories, but they
receive day-to-day guidance from the business units they support.
Competition and Regulation
In the global information movement and management industry, AT&T
serves markets that are highly competitive and subject to rapid changes in
technology and customer needs. Regulatory and court decisions, as well as
new technology, have expanded the types of available information movement
and management services and products and increased the number of
competitors offering such services and products. Many of AT&T's
competitors are large companies which have substantial capital,
technological and marketing resources.
The FCC has ruled that most business and residential customers must
select a preferred long distance carrier. In the course of the conversion
to "equal access" by a telephone company (equal access permits a customer
to use the service of any available long distance carrier, without the need
to dial a special access code), customers that fail to select a carrier
____________
* Registered trademark of AT&T
@ Registered trademark of Novell, Inc.
<PAGE>
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will have one selected for them, based on the percentage distribution of
customers having made selections. During 1989, as a result of Federal
court orders, most owners of premises on which telephone company owned
public telephones are located selected a long distance carrier. Premises
owners who did not select a long distance carrier had a carrier selected
for them through an allocation process similar to that used for business
and residential customers.
The FCC's "price caps" system of regulation, which applies to AT&T's
residential and small business outbound services, and all inbound 800
services, is designed to maximize the incentive for AT&T to increase
productivity and lower costs and increases AT&T's flexibility to respond to
market conditions. AT&T's price capped services are subject to price
ceilings, defined by indices based on AT&T's price levels at the initiation
of price cap regulation and adjusted annually to reflect changes in
inflation and certain other costs of doing business. The price ceilings
for services are also subject to a 3% annual decrease, which reflects a
2.5% productivity level that the FCC says AT&T has achieved historically
plus an additional 0.5%. AT&T may raise prices of individual services, but
must stay within the ceilings overall. Generally AT&T is prohibited from
raising or lowering the overall price of particular service categories by
more than 5% annually.
In 1991, the FCC adopted an order in its "interexchange competition"
proceeding (CC Docket No. 90-132), confirming that the interexchange market
is largely competitive. As a result, the order streamlined the regulation
of most AT&T outbound business services. These services are no longer
subject to price cap regulation; AT&T can file tariff revisions for these
services on 14 days notice; and AT&T can offer individually negotiated
contract-based rates for these services. On May 21, 1993, following the
implementation of 800 number portability, the regulation of AT&T's 800
services, with the exception of 800 Directory Assistance Service, were
streamlined and AT&T was permitted to include these services in its
individually negotiated contracts.
Three bills have been introduced into Congress that concern the
telecommunications industry, two in the House of Representatives and one in
the Senate. One of the House bills, H.R. 3626, establishes the FCC and
U. S. Department of Justice tests the Regional Bell Operating Companies
("RBOCs") must meet before they can provide long distance service. These
tests vary with the segment of the long distance market the RBOC seeks to
enter. This bill also outlines the conditions for RBOC entry into
manufacturing of telecommunications equipment.
The second House bill, H.R. 3636, would require local telephone
companies ("LECs") to provide interconnection equal access to their
exchanges. In exchange, the LECs will be permitted to provide cable
television services.
The Senate bill, S. 1822, combines many of the features of the House
bills. It includes a test which the RBOCs must meet before they would be
permitted to provide long distance service. This test requires that there
"be no substantial possibility the RBOC could use its monopoly power to
impede competition" in the market it seeks to enter. In areas where the
<PAGE>
- 11 -
RBOC provides local service, they must also prove that they face "actual
and demonstrable competition" before they could offer long distance
service. S. 1822 would also permit the RBOCs into manufacturing
immediately, but such activities would be subject to extensive post-entry
safeguards. Finally, like H.R. 3636, S. 1822 would permit the LECs to
enter the cable television market, but only in exchange for allowing
competitors into their local service market.
FINANCIAL SERVICES AND LEASING
The Company's operations in the financial services and leasing
industry are conducted through AT&T Capital Corporation ("AT&T Capital"), a
majority owned subsidiary of AT&T, and AT&T Universal Card Services Corp.
("AT&T Universal Card Services"), a wholly owned subsidiary of AT&T.
AT&T Capital
On November 19, 1992, the Company announced that AT&T Capital had
begun taking the legal and financial steps necessary to become more
financially independent of AT&T.
On August 4, 1993, an initial public offering combined with a
management stock offering took place, which totaled approximately 14
percent of AT&T Capital's common stock. As a result of the stock
offerings, approximately 86 percent of the outstanding common stock of AT&T
Capital is owned by AT&T indirectly through subsidiaries.
AT&T Capital is a full-service diversified equipment leasing and
finance company including captive programs, general and specialized leasing
throughout the United States and in Canada, Europe and Hong Kong.
AT&T Capital works side by side with AT&T and its affiliates to
provide customized financing for AT&T customers acquiring AT&T and
associated equipment. AT&T Capital also provides: financing in connection
with general equipment used by AT&T entities; the AT&T affiliate investment
recovery program; and AT&T's employee vehicle leasing program. AT&T
Capital's captive programs are partially dependent upon sales of products
by AT&T and its affiliates and the continued acceptance of these products
in the marketplace.
AT&T Capital's general and specialized financial products are
diversified. These financial products include: small and middle ticket
general equipment leasing, computer leasing and remarketing, comprehensive
fleet vehicle management and asset management.
AT&T Capital has expanded its international focus through equipment
leasing and financial services to customers in Canada, Europe, and Hong
Kong.
Competition
The leasing and finance industry is highly competitive. Participants
in the industry compete through price (including the ability to control
costs), risk management, innovation and customer service. Principal cost
factors include the cost of funds, the cost of selling to or acquiring new
end-user customers, and the cost of managing portfolios (including, for
example, billing, collection, property and sales tax, residual management,
etc.).
<PAGE>
- 12 -
In its leasing and financing operations and programs, AT&T Capital
competes with captive or related leasing companies (such as General
Electric Capital Corporation and IBM Credit Corporation), independent
leasing companies (such as Comdisco, Inc.), certain banks engaged in
leasing, lease brokers and investment banking firms that arrange for the
financing of leased equipment, and manufacturers and vendors who lease
their own products to customers. In addition, AT&T Capital competes with
all banking and other financial institutions, manufacturers, vendors and
others who extend or arrange credit for the acquisition of equipment and,
in a sense, with the available cash resources of end-users (i.e., end-users
may use their available cash resources to purchase equipment otherwise
financeable by AT&T Capital). Many of the competitors of AT&T Capital are
large companies that have substantial capital, technological and marketing
resources; some of these competitors are significantly larger than AT&T
Capital and have access to capital at a lower cost.
The activities of AT&T Capital are partially dependent upon sales of
products by AT&T and its affiliates. AT&T is subject to substantial
competition in the broad markets in which it competes. Thus, there is no
assurance as to the volume of financing opportunities that will be
generated by sales or leases of equipment by AT&T and its affiliates.
AT&T Universal Card Services
AT&T Universal Card Services began operations in early 1990. The AT&T
Universal Card is a combined general-purpose consumer credit card and AT&T
Calling Card that at year-end had receivables in the amount of $9.2 billion
in 1993, $6.6 billion in 1992, $3.8 billion in 1991, and $1.6 billion in
1990. The AT&T Universal Card is offered directly through AT&T Universal
Financial Corp., a Utah industrial loan company which is wholly owned by
AT&T, and under an affinity relationship with Universal Bank in Columbus,
Georgia, a subsidiary of Synovus Financial Corp. AT&T Universal Card
Services provides marketing and customer support for the AT&T Universal
Card program and it purchases cardholder receivables from Universal Bank.
The consumer credit card industry is highly competitive and some
seasonality exists, with a higher number of purchases occurring during the
year-end holiday season. The Company believes that the AT&T Universal Card
program is one of the top two or three bankcard/credit card programs, based
on generally available industry information, and on the number of
cardholder accounts in the United States.
In May 1990, four major United States banks filed complaints with the
FCC alleging, among other things, that the AT&T Universal Card program
illegally discriminated against AT&T customers not holding AT&T Universal
Cards, as well as credit card issuers in that the AT&T Universal Card
program provides for a 10% discount on AT&T calling card rates. These
banks also filed petitions with the Federal Deposit Insurance Corporation
("FDIC"), the Federal Reserve Board ("FRB"), and the Georgia Department of
Banking and Finance alleging that the AT&T Universal Card program, in its
current form, violated certain banking laws and regulations. The Georgia
Department of Banking and Finance, the FDIC and the FRB considered these
complaints and decided not to take any action in connection with the AT&T
Universal Card program. On December 21, 1993, the FCC released its
Memorandum Opinion and Order concluding that there is no merit to the
arguments of the banks that the AT&T Universal Card venture is unlawful
under the Communications Act or the Commission's Rules and relevant
decisions.
<PAGE>
- 13 -
On October 9, 1990, VISA U.S.A. announced changes in its affinity card
regulations which would limit the operations of affinity card programs.
VISA U.S.A. further announced that it will apply these rule changes on a
prospective basis, i.e., only to affinity card programs that commenced
after October 8, 1990. However, VISA U.S.A. stated that affinity card
programs which commenced prior to October 8, 1990, including the AT&T
Universal Card program, will be reviewed in the coming months to decide if
these new rules should be applied retroactively to such programs. On or
about November 29, 1990, VISA U.S.A. established a temporary moratorium, in
effect through June 4, 1991, on eligibility for membership in the VISA
association by financial institutions owned by nonbanking companies. VISA
U.S.A. noted that its moratorium on membership in VISA by financial
institutions owned by nonbanks also applies to the acquisition of an
existing member by a nonbanking organization. Under this moratorium, any
institution which would not be eligible to join VISA directly would be
precluded from joining indirectly through an acquisition, unless the
acquisition is approved by three-quarters of the VISA U.S.A. board of
directors. VISA U.S.A. deferred consideration of these matters until its
Board meeting of February 10-11, 1992, when it set aside the moratorium,
established an increased fee structure for new members and set forth new
affinity rules for card programs that commence after February 11, 1992. In
a briefing paper provided by VISA U.S.A. to the press, it confirmed that
the new membership rules have no impact on the AT&T Universal Card program.
OPERATING REVENUE AND RESEARCH AND DEVELOPMENT EXPENSE INFORMATION
For information about the consolidated operating revenues contributed
by the Company's major classes of products and services and about
consolidated research and development expenses, see revenue tables and
descriptions on pages 24 thru 27 and Consolidated Statements of Income on
page 31, of the Company's annual report to security holders for the year
ended December 31, 1993. Such information is incorporated herein by
reference, pursuant to General Instruction G(2).
EMPLOYEE RELATIONS
AT&T employs approximately 308,700 persons in its operations. About
35% of the employees of AT&T are represented by unions. Of those so
represented about 80% are represented by the Communications Workers of
America ("CWA"), which is affiliated with the AFL-CIO, about 19% by the
International Brotherhood of Electrical Workers ("IBEW"), which is also
affiliated with the AFL-CIO, and the remainder by other unions. Labor
agreements with these unions extend through May 27, 1995.
ENVIRONMENTAL MATTERS
The operations of the Company involve the release of materials to the
environment that are subject to regulation under environmental protection
laws. The Company is involved in a number of remedial actions to clean up
hazardous wastes in accordance with the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA", or "Superfund"), the
Resource Conservation and Recovery Act ("RCRA") and state environmental
laws. Such statutes require that certain parties fund remedial actions
regardless of fault. During 1993, as in prior years, the Company has been
making capital expenditures for environmental control facilities.
<PAGE>
- 14 -
An estimate of the costs of remedial actions or the amounts of capital
expenditures for future periods is subject to a number of uncertainties
including the following: the developing nature of administrative
regulations being promulgated under CERCLA, RCRA and other environmental
protection laws; the availability of other responsible parties at a site;
the availability of information regarding conditions at potential sites;
uncertainty as to how the laws and regulations may be applied to such
sites; multiple choices and costs associated with diverse technologies that
may be used in corrective actions at such sites; the eventual outcome of
claims for insurance coverage; and the time periods (which may be quite
lengthy) over which eventual remediation may occur. In the opinion of the
Company's management, capital expenditures and expenses in connection with
remedial actions to comply with the present environmental protection laws
will not have a material effect upon the Company's future expenditures,
earnings or competitive position beyond that provided for at year-end.
Item 2. Properties.
The properties of AT&T consist primarily of plant and equipment used
to provide long distance telecommunications services, manufacturing plants
at which the Company's products and systems are produced and administrative
office buildings.
Telecommunications plant and equipment consists of: central office
equipment, including switching and transmission equipment; connecting lines
(cables, wires, poles, conduits, etc.); land and buildings; and
miscellaneous properties (work equipment, furniture, plant under
construction, etc.). The majority of the connecting lines are on or under
public roads, highways and streets and international and territorial
waters. The remainder are on or under private property.
AT&T operates 97 manufacturing facilities located throughout the
United States and abroad which at December 31, 1993, had a total of about
33 million square feet. Approximately 30 million square feet are in owned
facilities and the remaining 3 million square feet are in leased premises.
Some of the non-U.S. operations are operated through joint ventures with
other parties (see the discussion of international alliances and ventures
contained in Item 1. Business). AT&T also operates a number of sales
offices, service, repair and distribution centers, and other facilities,
such as research and development laboratories.
AT&T continues to manage the deployment and utilization of its assets
in order to meet its global growth objectives while at the same time,
ensuring that these assets are generating economic value added for the
shareholder. AT&T will continue to manage its asset base consistent with
globalization initiatives, marketplace forces, productivity growth and
technology change.
<PAGE>
- 15 -
A substantial number of the administrative offices of AT&T are in
leased buildings. Substantially all of the important communications
facilities are in buildings owned by AT&T or leased from the regional
holding companies created at divestiture. Substantially all of the major
manufacturing plants and major centers are in owned buildings. Many of the
smaller facilities are in rented quarters. Most of the important buildings
are on land held in fee, but a few are on land held under long-term leases.
Item 3. Legal Proceedings.
In the normal course of business, AT&T is subject to proceedings,
lawsuits and other claims, including proceedings under government laws and
regulations related to environmental and other matters. Such matters are
subject to many uncertainties and outcomes are not predictable with
assurance. Consequently, AT&T is unable to ascertain the ultimate
aggregate amount of monetary liability or financial impact with respect to
these matters at December 31, 1993. While these matters could affect
operating results of any one quarter when resolved in future periods, it
is management's opinion that after final disposition, any monetary
liability or financial impact to AT&T beyond that provided for at year-end
would not be material to AT&T's annual consolidated financial statements.
On July 31, 1991, the United States Environmental Protection Agency
Region III issued a complaint pursuant to Section 3008a of the Resource
Conservation and Recovery Act alleging violations of various waste
management regulations at the Company's Richmond Works, Richmond, Virginia.
The complaint seeks a total of $4,184,304 in penalties. The Company is
contesting both liability and the penalties.
In addition, on July 31, 1991, the United States Environmental
Protection Agency filed a civil complaint in the U.S. District Court for
the Southern District of Illinois against the Company and nine other
parties seeking enforcement of its CERCLA Section 106 cleanup order, issued
in November 1990 for the NL Granite City Superfund site, Granite, Illinois,
past costs, civil penalties of $25,000 per day and treble damages related
to certain United States' costs. The Company is contesting liability.
On January 31, 1994, the Company pleaded guilty to a misdemeanor and
paid a fine of $175,000 in connection with environmental violations at the
Company's facilities in Reading, Pennsylvania.
The foregoing environmental proceedings are not material to the
consolidated financial statements or business of the Company and would not
be reported but for Instruction 5 C. of Item 103 of Regulation S-K, which
requires disclosure of such matters.
See also the discussion herein in Item 1. Business, for additional
information about environmental matters.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders in the fourth
quarter of the fiscal year covered by this report.
<PAGE>
<PAGE>
- 16 -
Executive Officers of the Registrant
(as of February 1, 1994)
Became
AT&T
Executive
Officer
Name Age on
Robert E. Allen* ....... 59 Chairman of the Board and Chief
Executive Officer ............ 9-86
Richard S. Bodman ...... 55 Senior Vice President, Corporate
Strategy and Development ..... 8-90
Harold W. Burlingame ... 53 Senior Vice President, Human
Resources .................... 9-86
Robert M. Kavner ....... 50 Executive Vice President AT&T
and Chief Executive Officer,
Multimedia Products and
Services Group ............... 3-89
Marilyn Laurie ......... 54 Senior Vice President, Public
Relations and Employee
Information .................. 2-87
Alex J. Mandl .......... 50 Executive Vice President AT&T
and Chief Executive Officer,
Communications Services Group 8-91
William B. Marx, Jr. ... 54 Executive Vice President AT&T
and Chief Executive Officer,
Network Systems Group ........ 7-89
John S. Mayo ........... 63 President, AT&T Bell
Laboratories ................. 7-91
Richard W. Miller ...... 53 Executive Vice President AT&T
and Chief Financial Officer .. 8-93
Victor A. Pelson** ..... 56 Executive Vice President AT&T
and Chairman Global Operations
Team ......................... 3-89
Jerre L. Stead ......... 51 Executive Vice President AT&T and
Chief Executive Officer, AT&T
Global Information Solutions
Company ...................... 9-91
Sam R. Willcoxon ....... 63 Group Executive AT&T and
President, Telephone Pioneers
of America ................... 3-89
John D. Zeglis ......... 46 Senior Vice President - General
Counsel and Government
Affairs ...................... 9-86
____________
*Member of the Board of Directors and Chairman of the Executive
and Proxy Committees.
**Member of the Board of Directors.
All of the above executive officers have held high level managerial
positions with AT&T or its affiliates for more than the past five years,
except Messrs. Bodman, Mandl, Miller and Stead who have been officers of
AT&T since August 23, 1990, August 1, 1991, August 9, 1993 and September 1,
1991, respectively. Mr. Bodman was President of Washington National
Investment Corp., an investment company, for more than five years prior to
joining AT&T. Prior to joining AT&T, Mr. Mandl was Chairman and Chief
Executive Officer of Sea-Land Service, Inc., an ocean transportation and
distribution services company, for three years. Prior to becoming an
<PAGE>
<PAGE>
- 17 -
executive officer of AT&T, Mr. Miller was with Wang Laboratories, Inc. from
1989 through 1993 serving as President and Chief Operating Officer and
later as Chairman, President and Chief Executive Officer. Prior to that,
Mr. Miller held several Executive Management positions with RCA and General
Electric. Prior to becoming Chief Executive Officer of AT&T Global
Information Solutions, Mr. Stead was President of AT&T Business
Communication Systems for two years. Mr. Stead was with Square D Company,
a worldwide leader in industrial control and electronical distribution
products, systems and services, from 1987 to 1991. He became president of
Square D in 1987, and was elected to the additional positions of chief
executive officer and chairman of the board in 1989.
Officers are not elected for a fixed term of office but hold office
until their successors have been elected.
PART II
Items 5 through 8.
The information required by these items is included in pages 21
through 44 and on the inside back cover of the Company's annual report to
security holders for the year ended December 31, 1993. The referenced
pages of the Company's annual report to security holders have been filed as
Exhibit 13 to this document. Such information is incorporated herein by
reference, pursuant to General Instruction G(2).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There have been no changes in independent auditors and no
disagreements with independent auditors on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedure during the last two years.
PART III
Items 10 through 13.
Information regarding executive officers required by Item 401 of
Regulation S-K is furnished in a separate disclosure in Part I of this
report because the Company did not furnish such information in its
definitive proxy statement prepared in accordance with Schedule 14A.
The other information required by Items 10 through 13 is included in
the Company's definitive proxy statement dated March 1, 1994, on page 6,
the first paragraph on page 7, the last paragraph on page 7 through
page 13, and the last paragraph on page 42 through page 56. Such
information is incorporated herein by reference, pursuant to General
Instruction G(3).
<PAGE>
- 18 -
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents filed as a part of the report:
(1) Financial Statements:
Pages
Report of Management ................................ *
Report of Independent Auditors ...................... *
Statements:
Consolidated Statements of Income ............... *
Consolidated Balance Sheets ..................... *
Consolidated Statements of Cash Flows ........... *
Notes to Consolidated Financial Statements ...... *
(2) Financial Statement Schedules:
Report of Independent Auditors ...................... 22
Schedules:
II--Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees
Other than Related Parties................... 23
V--Property, Plant and Equipment ................. 28
VI--Accumulated Depreciation ...................... 32
VIII--Valuation and Qualifying Accounts ............. 34
IX--Debt Maturing Within One Year ................. 36
X--Supplementary Income Statement Information .... 37
Schedules other than those listed above have been
omitted because such schedules are not required or
applicable.
Separate financial statements of subsidiaries not
consolidated and 50 percent or less owned persons are
omitted since no such entity constitutes a
"significant subsidiary" pursuant to the provisions of
Regulation S-X, Article 3-09.
____________
*Incorporated herein by reference to the appropriate portions of the
Company's annual report to security holders for the year ended
December 31, 1993. (See Part II.)
<PAGE>
- 19 -
(3) Exhibits:
Exhibits identified in parentheses below, on file with
the Securities and Exchange Commission ("SEC"), are
incorporated herein by reference as exhibits hereto.
Exhibit
Number
(3)a Restated Certificate of Incorporation of the
registrant, dated January 10, 1989, Certificate of
Change to Restated Certificate of Incorporation dated
March 18, 1992, and Certificate of Amendment to
Restated Certificate of Incorporation dated June 1,
1992 (Exhibit 4B to Form SE dated July 21, 1992, File
No. 1-1105).
(3)b By-Laws of the registrant, as amended April 20, 1993
(Exhibit 3.02 to Form S-4 dated February 1, 1994
Registration No. 33-52119, File No. 1-1105).
(4) No instrument which defines the rights of holders of
long term debt, of the registrant and all of its
consolidated subsidiaries, is filed herewith pursuant
to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to
this regulation, the registrant hereby agrees to
furnish a copy of any such instrument to the SEC upon
request.
(10)(iii)(A)1 AT&T Short Term Incentive Plan as amended December 16,
1992 (Exhibit (10)(iii)(A)1 to Form SE, dated
March 24, 1993, File No. 1-1105).
(10)(iii)(A)2 AT&T 1987 Long Term Incentive Program as amended
July 17, 1989 (Exhibit (10)(iii)(A)2 to Form SE dated
March 24, 1993, File No. 1-1105).
(10)(iii)(A)3 AT&T Senior Management Individual Life Insurance
Program dated January 1, 1987 (Exhibit (10)(iii)(A)1 to
Form SE, dated March 25, 1987, File No. 1-1105).
(10)(iii)(A)4 AT&T Senior Management Long Term Disability and
Survivor Protection Plan dated February 23, 1984
(Exhibit (10)(iii)(A)1 to Form SE, dated February 21,
1986, File No. 1-1105).
(10)(iii)(A)5 AT&T Senior Management Financial Counseling Program
dated March 14, 1994.
(10)(iii)(A)6 AT&T Deferred Compensation Plan for Non-Employee
Directors, as amended December 15, 1993.
(10)(iii)(A)7 AT&T Directors Individual Life Insurance Program dated
January 1, 1987 (Exhibit (10)(iii)(A)3 to Form SE,
dated March 25, 1987, File No. 1-1105).
<PAGE>
- 20 -
Exhibit
Number
(10)(iii)(A)8 AT&T Plan for Non-Employee Directors' Travel Accident
Insurance (Exhibit (10)(iii)(A)8 to Form 10-K for 1990,
File No. 1-1105).
(10)(iii)(A)9 Extract from AT&T (formerly Bell System) Management
Pension Plan regarding limitations on and payments of
pension amounts which exceed the limitations contained
in The Employee Retirement Income Security Act, with
amendments effective October 1, 1985 (Exhibit
(10)(iii)(A)2 to Form SE, dated February 21, 1986, File
No. 1-1105).
(10)(iii)(A)10 AT&T Non-Qualified Pension Plan, (with amendments
effective June 1, 1988) (Exhibit 10(iii)(A)10 to
Form SE, dated March 26, 1990, File No. 1-1105).
(10)(iii)(A)11 AT&T Senior Management Incentive Award Deferral Plan,
as amended December 18, 1991.
(10)(iii)(A)12 AT&T Mid-Career Hire Program revised effective January
1, 1988, including AT&T Mid-Career Pension Plan, as
amended May 15, 1985 (Exhibit (10)(iii)(A)4 to Form SE,
dated March 25, 1988, File No. 1-1105).
(10)(iii)(A)13 AT&T 1984 Stock Option Plan, as modified December 19,
1984 (Exhibit 10(t) to Form SE, dated February 27,
1985, File No. 0-13247).
(10)(iii)(A)14 Form of Indemnification Contract for Officers and
Directors (Exhibit (10)(iii)(A)6 to Form SE, dated
March 25, 1987, File No. 1-1105).
(10)(iii)(A)15 Pension Plan for AT&T Non-Employee Directors revised
February 20, 1989.
(10)(iii)(A)16 AT&T Senior Management Basic Life Insurance Program
(Exhibit (10)(iii)(A)16 to Form 10-K for 1990, File No.
1-1105).
(10)(iii)(A)17 Form of AT&T Benefits Protection Trust Agreement
(Exhibit (10)(iii)(A)17 to Form SE, dated March 25,
1992, File No. 1-1105).
(10)(iii)(A)18 Employment Agreement between American Telephone and
Telegraph Company and Alex J. Mandl dated August 1,
1991.
(10)(iii)(A)19 Employment Agreement between American Telephone and
Telegraph Company and Jerre L. Stead dated July 31,
1991, supplemented October 18, 1991 and March 29, 1993.
<PAGE>
- 21 -
Exhibit
Number
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) Specified portions (pages 21 through 44 and the inside
back cover) of the Company's Annual Report to security
holders for the year ended December 31, 1993.
(21) List of subsidiaries of AT&T.
(23) Consent of Coopers & Lybrand.
(24)a Powers of Attorney executed by officers and directors
who signed this report.
(24)b Board of Directors' Resolution.
Annual reports on Forms 11-K for the AT&T Long Term Savings
Plan for Management Employees, the AT&T Long Term Savings and
Security Plan, the AT&T Retirement Savings and Profit Sharing
Plan and the NCR Corporation Savings Plan will be filed
separately, on or before April 29, 1994.
AT&T will furnish, without charge, to a security holder upon
request a copy of the annual report to security holders and the
proxy statement, portions of which are incorporated herein by
reference thereto. AT&T will furnish any other exhibit at cost.
(b) Reports on Form 8-K:
Forms 8-K dated August 16, 1993, as amended, and October 8,
1993 were filed pursuant to Item 5. (Other Events) and Item 7.
(Financial Statements, Pro Forma Financial Information and
Exhibits), and Form 8-K dated December 30, 1993 was filed
pursuant to Item 5. (Other Events).
<PAGE>
- 22 -
REPORT OF INDEPENDENT AUDITORS
To the Shareowners of American Telephone and Telegraph Company:
Our report on the consolidated financial statements of American
Telephone and Telegraph Company and subsidiaries has been incorporated by
reference in this Form 10-K from page 30 of the 1993 Annual Report to the
Shareowners of American Telephone and Telegraph Company. In connection
with our audits of such financial statements, we have also audited the
related consolidated financial statement schedules listed in the index on
page 18 of this Form 10-K.
In our opinion, the consolidated financial statement schedules
referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information required to be included therein.
As discussed in our report referred to above and in Note 2 to the
consolidated financial statements, in 1993 the Company changed its methods
of accounting for postretirement benefits, postemployment benefits and
income taxes.
COOPERS & LYBRAND
1301 Avenue of the Americas
New York, New York
January 27, 1994
<PAGE>
- 23 -
<TABLE>
Schedule II--Sheet 1
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER
THAN RELATED PARTIES
- --------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- --------------------------------------------------------------------------------------------------------------------------
Balance at
Balance at Deductions End of Period
Name of Debtor Beginning Additions --------------------------------------------------
of Period (1) (2) (1) (2)
Amounts Amounts
Collected Written Off Current Not Current
- --------------------------------------------------------------------------------------------------------------------------
Year 1993
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Wajnert (a) $200,000 $ 0 $ 0 $ 0 $ 50,000 $ 150,000
(f) 0 2,616,403 3,580 0 2,612,823
Richard A. McGinn (b) 300,000 305,590 605,590 0 0 0
David K. Hunt (c) 0 1,200,000 350,000 0 0 850,000
Ron J. Ponder (d) 0 550,800 0 0 200,800 350,000
Daniel L. Clark (e) 0 340,000 0 0 113,333 226,667
<FN>
The Notes on Sheets 4 and 5 are an integral part of this schedule.
</TABLE>
<PAGE> - 24 -
<TABLE>
Schedule II--Sheet 2
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER
THAN RELATED PARTIES
- --------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- --------------------------------------------------------------------------------------------------------------------------
Balance at
Balance at Deductions End of Period
Name of Debtor Beginning Additions --------------------------------------------------
of Period (1) (2) (1) (2)
Amounts Amounts
Collected Written Off Current Not Current
- --------------------------------------------------------------------------------------------------------------------------
Year 1993
<S> <C> <C> <C> <C> <C> <C>
Edward Andrews (f) $ 0 $ 714,418 $ 4,506 $ 0 $ 0 $ 709,912
William Bridges (f) 0 168,527 266 0 0 168,261
Sterling Chadwick (f) 0 690,577 3,780 0 0 686,797
Frank Chartier (f) 0 457,226 3,125 0 0 454,101
Edward Cherney (f) 0 1,094,723 1,870 0 0 1,092,853
Nicholas Cyprus (f) 0 478,715 755 0 0 477,960
Michael DeBernardi (f) 0 451,366 2,847 0 0 448,519
George Deehan (f) 0 756,198 477 0 0 755,721
Edward Dwyer (f) 0 478,715 755 0 0 477,960
Geraldine Gold (f) 0 544,993 1,827 0 0 543,166
Timothy Hammill (f) 0 645,898 1,068 0 0 644,830
Ann Henry (f) 0 146,534 231 0 0 146,303
Robert Ingato (f) 0 149,475 236 0 0 149,239
Michelle Langstaff (f) 0 290,149 458 0 0 289,691
Madelyn Law (f) 0 283,574 485 0 0 283,089
G. Daniel McCarthy (f) 0 896,872 1,414 0 0 895,458
Kenneth Miltenberger (f) 0 488,987 3,084 0 0 485,903
Ruth Morey (f) 0 817,744 5,158 0 0 812,586
<FN>
The Notes on Sheets 4 and 5 are an integral part of this schedule.
</TABLE>
<PAGE>
- 25 -
<TABLE>
Schedule II--Sheet 3
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER
THAN RELATED PARTIES
- --------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- --------------------------------------------------------------------------------------------------------------------------
Balance at
Balance at Deductions End of Period
Name of Debtor Beginning Additions --------------------------------------------------
of Period (1) (2) (1) (2)
Amounts Amounts
Collected Written Off Current Not Current
- --------------------------------------------------------------------------------------------------------------------------
Year 1993
<S> <C> <C> <C> <C> <C> <C>
Judith Pfister (f) $ 0 $ 132,736 $ 0 $ 0 $ 0 $ 132,736
Irving Rothman (f) 0 1,121,106 1,768 0 0 1,119,338
Derek Soper (f) 0 871,665 6,029 0 0 865,636
Maureen Tart (f) 0 896,871 1,414 0 0 895,457
James Tenner (f) 0 642,481 366 0 0 642,115
Charles Van Sickle (f) 0 989,212 5,415 0 0 983,797
Charles Whittaker (f) 0 149,475 205 0 0 149,270
Carolyn Zachary (f) 0 146,534 802 0 0 145,732
William Zadrozny (f) 0 666,490 599 0 0 665,891
Year 1992
Thomas C. Wajnert (a) $200,000 -- -- -- -- $ 200,000
Richard A. McGinn (b) -- $ 600,000 $300,000 -- $300,000 --
Year 1991
Thomas C. Wajnert (a) -- $ 200,000 -- -- -- $ 200,000
<FN>
The Notes on Sheets 4 and 5 are an integral part of this schedule.
</TABLE>
<PAGE> - 26 -
<TABLE>
Schedule II--Sheet 4
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER
THAN RELATED PARTIES
<FN>
____________
<S> <C>
(a) On September 20, 1991, AT&T granted a demand loan of $200,000 with interest compounded monthly to Thomas J. Wajnert,
Chairman of the Board and Chief Executive Officer--AT&T Capital Corporation (a subsidiary of AT&T), as a result of a
compensation negotiation between AT&T and Mr. Wajnert. The interest rate for any month in which there is an unpaid
balance shall be the rate established by the Internal Revenue Service ("IRS"), under Section 1274(d) of the Internal
Revenue Code, as the applicable Federal short-term interest rate in effect for such month (3.8% for December 1993, 4%
for December 1992).
Mr. Wajnert made two interest payments on each of the following dates: 9/30/92 and 9/30/93. Principal payments of
$50,000 each plus accumulated interest are due and payable on the following four dates: 9/30/94, 9/30/95, 9/30/96 and
9/30/97.
(b) On September 23, 1992, AT&T granted Richard A. McGinn, President and Chief Operating Officer--Network Systems Group, a
$300,000 demand loan for a period of 150 days with interest compounded monthly at the interest rate established by the
IRS, under Section 1274(d) of the Internal Revenue Code, as the applicable Federal short-term interest rate. This loan
was paid in full in October 1992.
On December 7, 1992, AT&T granted Mr. McGinn a 150 day demand loan for $300,000 with interest compounded monthly based
on the rate established by the IRS as the applicable Federal short-term interest rate (4% for December 1992). Full
repayment of principal and interest was due and payable on 5/5/93.
On May 26, 1993, AT&T granted Mr. McGinn a demand loan in the amount of $305,590 with interest compounded monthly on the
unpaid balance to satisfy the principal and interest on the December 7, 1992 loan. The interest rate for any month in
which there was an unpaid balance was the rate established by the IRS, under Section 1274(d) of the Internal Revenue
Code, as the applicable Federal short-term interest rate in effect for such month (3.8% for December 1993). Full
repayment of principal and interest was made on 12/31/93.
(c) On May 7, 1993, AT&T granted a loan of $1,200,000 with an interest rate of 5.33% compounded monthly to David K. Hunt,
President and Chief Executive Officer--Universal Card Services, to exercise stock options at his former employer, Signet
Banking Corp. On 7/14/93, Mr. Hunt repaid $350,000 in principal and $12,074 in interest. He rolled over the balance of
$850,000 into two new loans.
a) $701,000 effective 7/15/93 with interest compounded monthly on the unpaid balance. The loan was to exercise stock
options at Signet Banking Corp. Payment on this loan consists of two installments. The first payment of $350,500 plus
interest is due on 7/15/96. The second payment of $350,500 plus interest is due on 7/15/98. This loan is secured by
52,720 shares of Signet Banking Corp. common stock.
b) $149,000 effective 7/15/93 with interest compounded monthly on the unpaid balance. The loan was to pay taxes on
the stock option exercise. Principle plus interest is due on 7/15/95.
The interest rate on these loans for any month in which there is an unpaid balance shall be the rate established by the
IRS, under Section 1274(d) of the Internal Revenue Code, as the applicable Federal mid-term interest rate in effect for
the month of July 1993 (5.4%).
</TABLE>
<PAGE>
- 27 -
<TABLE>
Schedule II--Sheet 5
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER
THAN RELATED PARTIES
<FN>
____________
<S> <C>
(d) On July 1, 1993, AT&T granted an interest free loan of $200,800 to Ron J. Ponder, Senior Vice President AT&T and Chief
Information Officer, for monies owed to his former employer U.S. Sprint. Full repayment of the principle balance shall
be due and payable on 6/30/94 (one year from the effective date of the loan).
On July 30, 1993, AT&T granted an interest free loan of $350,000 to Ron J. Ponder to purchase a home. Full repayment of
the principle balance shall be due and payable on 7/30/98 (five years from the effective date of the loan).
(e) On November 17, 1993, AT&T granted a loan of $340,000 plus interest compounded monthly to Daniel L. Clark, Vice
President--Consumer Communications Services, for monies owed to his former employer MCI, Inc. ("MCI"). Mr. Clark was
required to pay off his loan from MCI prior to working for AT&T. Payments of $113,333.33 plus accumulated interest are
due on the following dates: 11/1/94, 11/1/95 and 11/1/96. The interest rate for any month in which there is an unpaid
balance shall be the rate established by the IRS, under Section 1274(d) of the Internal Revenue Code, as the applicable
Federal mid-term interest rate in effect for the month of November 1993 (4.8%).
(f) The loans, made by AT&T Capital Corporation to its managers, represent seven year full recourse loans bearing interest
at a rate of 6% per annum payable at maturity, except to the extent mandatory payments of interest are required by the
AT&T Capital Corporation 1993 Leveraged Stock Purchase Plan ("LSPP"). The loans were made to participants in the AT&T
Capital Corporation LSPP to fund a significant portion of the purchase price of equity securities of AT&T Capital
Corporation. The purchased shares are pledged to AT&T Capital Corporation to secure repayment of the loan.
</TABLE>
<PAGE>
- 28 -
<TABLE>
Schedule V--Sheet 1
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
(Millions of Dollars)
- ---------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ---------------------------------------------------------------------------------------------------------------------------
Balance at Other Balance at
Beginning Additions Retire- Changes End of
Classification of Period at Cost (a) ments Add(Deduct)(b) Period
- ---------------------------------------------------------------------------------------------------------------------------
Year 1993
<S> <C> <C> <C> <C> <C>
Land and improvements ..................... $ 690 $ 10 $ 12 $ 58 $ 746
Buildings and improvements ................ 8,243 466 197 0 8,512
Machinery, electronic and other
equipment ............................... 31,117 3,481(c) 2,531(d) (432) 31,635
------- ------ ------ ----- -------
Total (e) ............................... $40,050 $3,957 $2,740 $(374) $40,893
======= ====== ====== ===== =======
<FN>
The Notes on Sheet 4 are an integral part of this Schedule.
</TABLE>
<PAGE>
- 29 -
<TABLE>
Schedule V--Sheet 2
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
(Millions of Dollars)
- ---------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ---------------------------------------------------------------------------------------------------------------------------
Balance at Other Balance at
Beginning Additions Retire- Changes End of
Classification of Period at Cost (a) ments Add(Deduct)(b) Period
- ---------------------------------------------------------------------------------------------------------------------------
Year 1992
<S> <C> <C> <C> <C> <C>
Land and improvements ..................... $ 684 $ 23 $ 8 $ (9) $ 690
Buildings and improvements ................ 8,229 406 89 (303) 8,243
Machinery, electronic and other
equipment ............................... 30,979 3,814(c) 3,432(d) (244) 31,117
------- ------ ------ ----- -------
Total (e) ............................... $39,892 $4,243 $3,529 $(556) $40,050
======= ====== ====== ===== =======
<FN>
The Notes on Sheet 4 are an integral part of this Schedule.
</TABLE>
<PAGE>
- 30 -
<TABLE>
Schedule V--Sheet 3
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
(Millions of Dollars)
- ---------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ---------------------------------------------------------------------------------------------------------------------------
Balance at Other Balance at
Beginning Additions Retire- Changes End of
Classification of Period at Cost (a) ments Add(Deduct)(b) Period
- ---------------------------------------------------------------------------------------------------------------------------
Year 1991
<S> <C> <C> <C> <C> <C>
Land and improvements ..................... $ 652 $ 6 $ 2 $ 28 $ 684
Buildings and improvements ................ 8,302 365 185 (253) 8,229
Machinery, electronic and other
equipment ............................... 32,492 3,722(c) 4,962(d) (273) 30,979
------- ------ ------ ----- -------
Total (e) ............................... $41,446 $4,093 $5,149 $(498) $39,892
======= ====== ====== ===== =======
<FN>
The Notes on Sheet 4 are an integral part of this Schedule.
</TABLE>
<PAGE>
- 31 -
Schedule V--Sheet 4
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
(Millions of Dollars)
(a) The additions shown in column C are stated at original cost
plus capitalized interest.
(b) Includes changes in lease classification, reclassifications
between accounts, currency translation adjustments and, in
1993, relating to the consolidation of the $137 USG
investment, and in 1992, $57 relating to the merger with
Teradata.
(c) Represents purchases of machinery and equipment, principally
telephone plant.
(d) Includes retirements of telecommunications network plant of
approximately $1,400, $2,000 and $3,100 in 1993, 1992 and
1991, respectively.
(e) See Note (1) to the Consolidated Financial Statements for a
description of depreciation policies.
<PAGE>
<PAGE>
- 32 -
<TABLE>
Schedule VI--Sheet 1
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION
(Millions of Dollars)
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- -----------------------------------------------------------------------------------------------------------------------
Additions
Balance at Charged to Other Balance at
Beginning Costs and Retire- Changes End of
Description of Period Expenses ments Add(Deduct)(a) Period
- -----------------------------------------------------------------------------------------------------------------------
Year 1993
<S> <C> <C> <C> <C> <C>
Land improvements ......................... $ 97 $ 8 $ 7 $ 8 $ 106
Buildings and improvements ................ 2,990 312 80 41 3,263
Machinery, electronic and other
equipment ............................... 17,605 3,306 2,471 (313) 18,127
------- ------ ------ ------ -------
Total ................................... $20,692 $3,626 $2,558 $(264)(b) $21,496
======= ====== ====== ====== =======
Year 1992
Land improvements ......................... $ 128 $ 6 $ -- $ (37) $ 97
Buildings and improvements ................ 2,234 266 112 602 2,990
Machinery, electronic and other
equipment ............................... 18,841 3,268 3,351 (1,153) 17,605
------- ------ ------ ------- -------
Total ................................... $21,203 $3,540 $3,463 $ (588)(b) $20,692
======= ====== ====== ======= =======
<FN>
The Notes on Sheet 2 are an integral part of this Schedule.
/TABLE
<PAGE>
<PAGE> - 33 -
<TABLE>
Schedule VI--Sheet 2
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION
(Millions of Dollars)
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- -----------------------------------------------------------------------------------------------------------------------
Additions
Balance at Charged to Other Balance at
Beginning Costs and Retire- Changes End of
Description of Period Expenses ments Add(Deduct)(a) Period
- -----------------------------------------------------------------------------------------------------------------------
Year 1991
<S> <C> <C> <C> <C> <C>
Land improvements ......................... $ 121 $ 5 $ -- $ 2 $ 128
Buildings and improvements ................ 2,912 356 177 (857) 2,234
Machinery, electronic and other
equipment ............................... 19,752 3,484 4,765 370 18,841
------- ------ ------ ------- -------
Total ................................... $22,785 $3,845 $4,942 $ (485)(b) $21,203
======= ====== ====== ======= =======
<FN>
____________
(a) Includes changes in lease classification, reclassifications between accounts, and currency translation adjustments.
(b) Includes $(67) in 1993, $(232) in 1992 and $(193) in 1991 for the utilization of reserves established in 1988 for
costs associated with the accelerated digitization of AT&T's telecommunications network.
</TABLE>
<PAGE>
- 34 -
<TABLE>
Schedule VIII--Sheet 1
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
(Millions of Dollars)
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------
Additions
------------------------
(1) (2)
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Description of Period Expenses Accounts Deductions(a) of Period
- -----------------------------------------------------------------------------------------------------------------------
Year 1993
<S> <C> <C> <C> <C> <C>
Allowances for doubtful accounts (b) ..... $ 982 $1,635 $66(c) $1,495 $1,188
Reserves related to business
restructuring and facility
consolidation (d) ...................... $2,006 $ 416 $ 5 $ 987(e) $1,440
Year 1992
Allowances for doubtful accounts (b) ..... $1,024 $1,945 $31(c) $2,018 $ 982
Reserves related to business
restructuring, including force
and facility consolidation (d) ......... $2,792 $ 64 $ 8 $ 858 $2,006
<FN>
The Notes on Sheet 2 are an integral part of this Schedule.
</TABLE>
<PAGE>
- 35 -
<TABLE>
Schedule VIII--Sheet 2
<CAPTION>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
(Millions of Dollars)
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------
Additions
------------------------
(1) (2)
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Description of Period Expenses Accounts Deductions(a) of Period
- -----------------------------------------------------------------------------------------------------------------------
Year 1991
<S> <C> <C> <C> <C> <C>
Allowances for doubtful accounts (b) ..... $ 592 $1,233 $ 7(c) $ 808 $1,024
Reserves related to business
restructuring, including force
and facility consolidation (d) ......... $ 536 $3,067 $-- $ 811 $2,792
<FN>
____________
(a) Amounts written off as uncollectible, payments and reversals.
(b) Includes allowances for doubtful accounts on long-term receivables of $185, $153 and $88 in 1993, 1992 and 1991,
respectively (included in Finance receivables in the Consolidated Balance Sheets).
(c) Amounts previously written off which were credited directly to this account when recovered.
(d) Included primarily in Other current liabilities and in Other liabilities in the Consolidated Balance Sheets.
(e) Upon adoption in 1993 of Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," $412 of business restructuring reserves established before 1993 were reclassified to
postemployment benefit liabilities.
</TABLE>
<PAGE>
- 36 -
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE IX--DEBT MATURING WITHIN ONE YEAR
(Millions of Dollars)
- ------------------------------------------------------------------------------
COL. A COL. B COL. C
- ------------------------------------------------------------------------------
Weighted
Amount Average
at December 31 Interest Rate
-------------------------- ----------------------
1993 1992 1991 1993 1992 1991
------ ------ ------ ------ ------ ------
Notes Payable:
Commercial paper ... $ 8,761 $6,053 $4,775 3.3% 3.8% 6.0%
Other notes ........ 231 281 384 10.0% 10.9% 10.6%
Current portion of
long-term lease
obligations ........ 52 108 92
Current portion of
long-term debt ..... 1,860 1,158 1,802
------- ------ ------
Total(a) .... $10,904 $7,600 $7,053
======= ====== ======
Amount for the Year
1993 1992 1991
------ ------ ------
Average amounts of
Notes Payable
outstanding during
the year ........... $8,010 $5,117 $4,299 3.7%(b) 4.4%(b)6.8%(b)
Maximum amounts of
Notes Payable at
any month end
during the year .... $9,959 $6,334 $5,159
____________
(a) See Note (5) to the Consolidated Financial Statements.
(b) Computed by dividing the average face amount of notes payable into the
aggregate related interest expense.
<PAGE>
- 37 -
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Millions of Dollars)
- -----------------------------------------------------------------------------
COL. A COL. B
- -----------------------------------------------------------------------------
Item Charged to Costs and Expenses
- -----------------------------------------------------------------------------
1993 1992 1991
-------- -------- --------
Maintenance and repairs .................... $2,187 $2,164 $1,842
Taxes, other than payroll and income taxes . $ 657 $ 702 $ 710
Advertising ................................ $1,665 $1,270 $1,244
<PAGE>
- 38 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
By S. L. Prendergast
Vice President and Treasurer
March 24, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Principal Executive Officer: #
#
Robert E. Allen Chairman #
of the Board #
#
#
Principal Financial Officer: #
#
Richard W. Miller Chief Financial #
Officer #
#
Principal Accounting Officer: #
#
Maureen B. Tart Vice President ## By S. L. Prendergast
and Controller # (attorney-in-fact)*
#
Directors: #
# March 24, 1994
Robert E. Allen #
M. Kathryn Eickhoff #
Walter Y. Elisha #
Philip M. Hawley #
Carla A. Hills #
Belton K. Johnson #
Drew Lewis #
Donald F. McHenry #
Victor A. Pelson #
Donald S. Perkins #
Henry B. Schacht #
Michael I. Sovern #
Franklin A. Thomas #
Joseph D. Williams #
Thomas H. Wyman #
<PAGE> 1
EXHIBIT INDEX
The exhibits identified in parentheses below, on file with the SEC,
are incorporated herein by reference as exhibits hereto.
Exhibit
Number
(3)a Restated Certificate of Incorporation of the registrant, as
dated January 10, 1989, Certificate of Change to Restated
Certificate of Incorporation dated March 18, 1992, and
Certificate of Amendment to Restated Certificate of
Incorporation dated June 1, 1992 (Exhibit 4B to Form SE
dated July 21, 1992, File No. 1-1105).
(3)b By-Laws of the registrant, as amended April 20, 1993
(Exhibit 3.02 to Form S-4 dated February 1, 1994
Registration No. 33-52119, File No. 1-1105).
(4) No instrument which defines the rights of holders of long
term debt, of the registrant and all of its consolidated
subsidiaries, is filed herewith pursuant to Regulation S-K,
Item 601(b)(4)(iii)(A). Pursuant to this regulation, the
registrant hereby agrees to furnish a copy of any such
instrument to the SEC upon request.
(10)(iii)(A)1 AT&T Short Term Incentive Plan as amended December 16, 1992
(Exhibit (10)(iii)(A)1 to Form SE, dated March 24, 1993,
File No. 1-1105).
(10)(iii)(A)2 AT&T 1987 Long Term Incentive Program as amended July 17,
1989 (Exhibit (10)(iii)(A)2 to Form SE dated March 24, 1993,
File No. 1-1105).
(10)(iii)(A)3 AT&T Senior Management Individual Life Insurance Program
dated January 1, 1987 (Exhibit (10)(iii)(A)1 to Form SE,
dated March 25, 1987, File No. 1-1105).
(10)(iii)(A)4 AT&T Senior Management Long Term Disability and Survivor
Protection Plan dated February 23, 1984 (Exhibit
(10)(iii)(A)1 to Form SE, dated February 21, 1986, File No.
1-1105).
(10)(iii)(A)5 AT&T Senior Management Financial Counseling Program dated
March 14, 1994.
(10)(iii)(A)6 AT&T Deferred Compensation Plan for Non-Employee Directors,
as amended December 15, 1993.
<PAGE> 2
Exhibit
Number
(10)(iii)(A)7 AT&T Directors Individual Life Insurance Program dated
January 1, 1987 (Exhibit (10)(iii)(A)3 to Form SE, dated
March 25, 1987, File No. 1-1105).
(10)(iii)(A)8 AT&T Plan for Non-Employee Directors' Travel Accident
Insurance (Exhibit (10)(iii)(A)8 to Form 10-K for 1990, File
No. 1-1105).
(10)(iii)(A)9 Extract from AT&T (formerly Bell System) Management Pension
Plan regarding limitations on and payments of pension
amounts which exceed the limitations contained in The
Employee Retirement Income Security Act, with amendments
effective October 1, 1985 (Exhibit (10)(iii)(A)2 to Form SE,
dated February 21, 1986, File No. 1-1105).
(10)(iii)(A)10 AT&T Non-Qualified Pension Plan, (with amendments effective
June 1, 1988) (Exhibit 10(iii)(A)10 to Form SE, dated March
26, 1990, File No. 1-1105).
(10)(iii)(A)11 AT&T Senior Management Incentive Award Deferral Plan, as
amended December 18, 1991.
(10)(iii)(A)12 AT&T Mid-Career Hire Program revised effective January 1,
1988, including AT&T Mid-Career Pension Plan, as amended May
15, 1985 (Exhibit (10)(iii)(A)4 to Form SE, dated March 25,
1988, File No. 1-1105).
(10)(iii)(A)13 AT&T 1984 Stock Option Plan, as modified December 19, 1984
(Exhibit 10(t) to Form SE, dated February 27, 1985, File No.
0-13247).
(10)(iii)(A)14 Form of Indemnification Contract for Officers and Directors
(Exhibit (10)(iii)(A)6 to Form SE, dated March 25, 1987,
File No. 1-1105).
(10)(iii)(A)15 Pension Plan for AT&T Non-Employee Directors revised
February 20, 1989.
(10)(iii)(A)16 AT&T Senior Management Basic Life Insurance Program (Exhibit
(10)(iii)(A)16 to Form 10-K for 1990, File No. 1-1105).
(10)(iii)(A)17 Form of AT&T Benefits Protection Trust Agreement (Exhibit
(10)(iii)(A)17 to Form SE, dated March 25, 1992, File No.
1-1105).
(10)(iii)(A)18 Employment Agreement between American Telephone and
Telegraph Company and Alex J. Mandl dated August 1, 1991.
(10)(iii)(A)19 Employment Agreement between American Telephone and
Telegraph Company and Jerre L. Stead dated July 31, 1991,
supplemented October 18, 1991 and March 29, 1993.
<PAGE> 3
Exhibit
Number
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) Specified portions (pages 21 through 44 and the inside back
cover) of the Company's Annual Report to security holders
for the year ended December 31, 1993.
(21) List of subsidiaries of AT&T.
(23) Consent of Coopers & Lybrand.
(24)a Powers of Attorney executed by officers and directors who
signed this report.
(24)b Board of Directors' Resolution.
<PAGE> Exhibit (10)(iii)(A) 5
AT&T Form 10-K
SENIOR MANAGEMENT FINANCIAL COUNSELING PROGRAM
GENERAL DESCRIPTION OF SERVICES
AT&T offers a financial counseling program to all active Senior
Managers. This program is extended to retired Senior Managers
during the first year of retirement. In addition, eligibility is
extended to the spouse and/or immediate family members in the
event of death of a participating Senior Manager. Participation
in the program is voluntary.
Upon election to participate in the program, the Senior Manager
can select from three financial counseling firms utilized by
AT&T, all of which have nation-wide branches; Asset Management
Group (AMG), The AYCO Corporation and Coopers & Lybrand. AMG has
a base office in Englewood, Colorado and a local office in
Parsippany, New Jersey. Ayco Corporation is based in Albany, New
York, and has a local office in Florham Park, New Jersey.
Coopers & Lybrand, has a local office in Parsippany, New Jersey.
Upon selection of a firm, the Senior Manager is assigned a
personal counselor who will schedule a preliminary interview
which is primarily a get acquainted session. During the
interview, the counselor will outline the services offered by the
firm and describe the type of personal information and documents
the Senior Manager will need to provide to the counselor. The
types of documents and personal information include items such as
wills, deeds, insurance policies and trusts, as well as complete
data on the Senior Manager's financial status. All information
is held strictly confidential between the financial counseling
firm and the Senior Manager.
The counselor will schedule a follow-up interview at which time
an in depth examination of the financial goals and objectives of
the Senior Manager and the spouse is completed.
After all pertinent data has been analyzed, the counselor will
prepare a comprehensive report for presentation to the Senior
Manager. The report outlines the Senior Manager's current
financial status, indicates areas requiring adjustments, if any,
and recommends future financial actions.
<PAGE>
<PAGE> 2
The types of services provided in the program include:
* COMPANY PROVIDED BENEFITS PLANNING
* ESTATE PLANNING
* INSURANCE PLANNING
* INVESTMENT PLANNING
* INCOME TAX PLANNING
In addition to the above services, the Senior Management
Financial Counseling Program covers the cost of personal income
tax preparation and the preparation of wills and trusts
associated with estate planning.
Although AMG, AYCO and Coopers & Lybrand provide tax preparation
services, the Senior Manager may engage their own attorney or tax
accounting firm for both estate planning and tax preparation.
Attached is a summary of the current financial counseling fees by
firm and type of service. Each of the three firms bills AT&T
Executive Human Resources, who in turn pays the bills and charges
the expense to each individual Senior Manager's budget.
The amount of each financial counseling invoice paid on behalf of
a Senior Manager by AT&T, is treated as imputed income to the
Senior Manager. The imputed amount is reflected in the Senior
Manager's paycheck and appropriate federal and state taxes are
withheld from the imputed income at "flat" tax rates.
Every February, a tax allowance payment is made to each Senior
Manager to offset any adverse tax effects as a result of the non-
deductibility of all or a portion of the financial counseling
fees paid by AT&T on their behalf. The tax allowance payment is
considered taxable income in the year in which the payment is
received.
This program is administered by Kathy Convery of Executive Human
Resources. Kathy can be reached on (908) 221-4444.
03/14/94
<PAGE> 3
AT&T SENIOR MANAGEMENT FINANCIAL COUNSELING PROGRAM
CONTACTS AT FINANCIAL COUNSELING FIRMS
THE AYCO CORPORATION
- --------------------
Dick Cummins
The Ayco Corporation
One Wall Street
Albany, NY 12205
(518) 464-2000
Joel Schaller
The Ayco Corporation
325 Columbia Turnpike
Florham Park, NJ 07932
(201) 514-2120
ASSET MANAGEMENT GROUP
- ----------------------
Todd Cleary
Asset Management Group
10 Sylvan Way
Parsippany, NJ 07054
(201) 644-2656
COOPERS AND LYBRAND
- -------------------
Tom Ross
Coopers and Lybrand
One Sylvan Way
Parsippany, NJ 07054
(201) 829-9226
3/94
<PAGE> 4
<TABLE>
<CAPTION>
1994 FEE SCHEDULE
(Annual Fee Per Participant)
Type of Service Counseling Firms
--------------- ----------------
AYCO# AMG C&L
----- --- ---
<S> <C> <C> <C>
New Participant (First Year) $10,550 $10,500 $10,500
(NOTE:
AMG's First Year fee
includes income tax
preparation)
Continued Counseling $ 5,300 $ 9,825 $ 6,500
Income Tax Preparation $ 1,700* $ 2,950 $ 2,500*
<FN>
- --------------
* Variable -- 1993 average amount.
# Fees are subject to a 15% surcharge for all participants who are serviced out of
the California Regional Office due to the higher cost of conducting business.
3/94
/TABLE
<PAGE>
<PAGE> Exhibit (10)(iii)(A)6
AT&T Form 10-K
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Eligibility
-----------
Each member of the Board of Directors ("Board") of the American
Telephone and Telegraph Company ("Company") who is not an employee of
the Company, or of any of its subsidiaries, is eligible to participate
in a Deferred Compensation Plan for Non-Employee Directors ("Plan").
2. Participation
-------------
(a) Prior to the beginning of any calendar year, or in the case
of newly elected Directors, within 90 days of such election, each
eligible Director may elect to participate in the Plan by directing
that all or any part of the compensation which would otherwise have
been payable currently for services as a Director (including fees
payable for services as a member of a committee of the Board) during
such calendar year, or, in the case of newly elected Directors, during
the remainder of such calendar year, shall be credited to a deferred
compensation account subject to the terms of the Plan.
(b) Such an election to participate in the Plan shall be in the
form of a document executed by the Director and filed with the
Secretary of the Company. An election related to fees otherwise
payable currently in any calendar year shall become irrevocable on the
last day prior to the beginning of such calendar year, or, in the case
of new Directors, on the 90th day after becoming a Director. An
election shall continue until a Director ceases to be a Director or
until he or she terminates or modifies such election by written
notice. Any such termination or modification shall become effective
as of the end of the calendar year in which such notice is given with
respect to all fees otherwise payable in subsequent calendar years. A
Director who has filed a termination of election may thereafter again
file an election to participate for any calendar year or years
subsequent to the filing of such election.
(c) Also, a Director's deferred compensation account
automatically shall be credited with that part of the Director's
compensation for any calendar year (including fees for services as a
member of the Board), which the Board has directed to be credited
under this Plan. Such compensation shall be credited at the time that
the related compensation is or would otherwise have been paid
currently.
<PAGE>
- 2 -
3. Deferred Compensation Accounts
------------------------------
(a) At the time of election to participate in the Plan under Item
2(a) above, a Director shall also designate the percentage of such
deferred amounts to be credited to the AT&T Shares portion of the
Director's deferred account and the percentage to be credited to the
Cash portion of such account. All deferred amounts credited under
Item 2(c) above shall be credited to the AT&T Shares portion of the
Director's deferred account.
(b) Deferred AT&T Shares. Deferred amounts credited to the AT&T
Shares portion of a Director's account on the date the related
compensation is or would be otherwise be paid shall be converted to a
number of deferred AT&T Shares, determined by dividing the amount of
such compensation by the price of AT&T common shares, as determined in
the last sentence of this paragraph. The Director's account shall
also be credited on each dividend payment date for AT&T Shares with an
amount equivalent to the dividend payment on the number of AT&T common
shares equal to the number of deferred AT&T Shares in the Director's
account on the record date for such dividend. Such amount shall then
be converted to a number of additional deferred AT&T Shares determined
by dividing such amount by the price of AT&T common shares, as
determined in the last sentence of this paragraph. The price of AT&T
common shares related to any compensation or dividend payment date
shall be the average of the daily high and low sale prices of AT&T
common shares on the New York Stock Exchange ("NYSE")for the period of
five trading days ending on such date, or the period of five trading
days immediately preceding such date, if the NYSE is closed on such
date.
In the event of any change in outstanding AT&T common shares by
reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar
corporate change, the AT&T Board of Directors shall make such
adjustments, if any, that it deems appropriate in the number of
deferred AT&T Shares then credited to Director's accounts. Any and
all such adjustments shall be conclusive and binding upon all parties
concerned.
The maximum number of deferred AT&T Shares that may be maintained
in the AT&T Shares portion of all Directors' deferred compensation
account may not exceed 2 million. This number is subject to
adjustment to take into consideration adjustment in the number of
outstanding AT&T common shares as described in the preceding
paragraph.
<PAGE>
- 3 -
(c) Deferred Cash. Deferred amounts credited to the Cash portion
of a Director's account shall bear interest from the date the related
compensation is or would otherwise be paid. The interest credited to
the Cash portion of the account will be compounded quarterly at the
end of each calendar quarter. For all amounts whenever credited, the
rate of interest credited thereon, as of the end of each calendar
quarter ending after December 31, 1985, shall be equal to the average
ten-year U.S. Treasury note rate for the previous calendar quarter
plus 5% or such other rate as shall be determined from time to time by
the Board of Directors.
4. Distribution
-------------
(a) At the time of election to participate in the Plan, a
Director shall also make elections with respect to the distribution
(during the Director's lifetime or in the event of the Director's
death) of amounts deferred under the Plan plus accumulated earnings.
Such elections shall be contained in the document referred to in Item
2(b), executed by the Director and filed with the Secretary of the
Company. The election with respect to the distribution during the
Director's lifetime, of fees for any calendar year, shall become
irrevocable on the last day prior to the beginning of such calendar
year. The election related to the distribution in the event of the
Director's death, including the designation of a beneficiary or
beneficiaries, may be changed by the Director at any time, by filing
the appropriate document with the Secretary of the Company.
(b) A Director may elect to receive amounts credited to his or
her account in one payment or in some other number of equal annual
installments (not exceeding 20), provided, however, that the number of
annual installments may not extend beyond the life expectancy of the
Director, determined as of the date the first installment is paid.
The election shall direct that the first installment (or the single
payment if the Director has so elected) be paid on the first day of
the calendar year immediately following either (1) the year in which
Director ceases to be a Director of the Company, or (2) the later of
the year in which the Director ceases to be a Director of the Company
or the year in which the Director attains the age specified in such
election, which age shall not be later than age 70-1/2. Each
distribution shall be made pro-rata from amounts credited to the Cash
portion and to the AT&T Shares portion of the Director's account on
the applicable payment date.
(c) All distributions shall be in cash. For this purpose, the
value of deferred AT&T Shares distributed on any payment date shall be
determined by multiplying the number of such deferred AT&T Shares by
the price of AT&T common stock, as determined in the following
sentence. The price of AT&T common shares related to any payment date
shall be the average of the daily high and low sale prices of AT&T
common shares on the New York Stock Exchange ("NYSE") for the period
of five trading days ending on such date, or the period of five
trading days immediately preceding such date, if the NYSE is closed on
such date.
<PAGE>
- 4 -
(d) Not withstanding an election pursuant to Item 4(b), in the
event a Director engages in any competitive activity, as determined in
accordance with and pursuant to the terms and conditions of the AT&T
Non-Competition Guideline, or becomes employed by any governmental
agency having jurisdiction over the activities of the Company or any
of its subsidiaries, the entire balance in the Director's deferred
account, including earnings, shall be paid immediately in a single
payment.
(e) A Director may elect that, in the event the Director should
die before full payment of all amounts credited to the Director's
deferred account, the balance of the deferred amounts shall be
distributed in one payment or in some other number of approximately
qual annual installments (not exceeding 10) to the beneficiary or
beneficiaries designated in writing by the Director, or if no
designation has been made, to the estate of the Director. The first
installment (or the single payment if the Director has so elected)
shall be paid on the first day of the calendar year following the year
of death.
(f) Installments subsequent to the first installment to the
Director, or to a beneficiary or to the Director's estate, shall be
paid on the first day of each succeeding calendar year until the
entire amount credited to the Director's deferred account shall have
been paid. Deferred amounts held pending distribution shall continue
to be credited with earnings, determined in accordance with Item 3.
5. Miscellaneous
-------------
(a) The right of a Director to any deferred fees and/or earnings
thereon shall not be subject to assignment by the Director.
(b) All deferred amounts shall be held in the general funds of
the Company. The Company shall not be required to reserve, or
otherwise set aside, funds for the payment of its obligations
hereunder.
(c) Copies of the Plan and any and all amendments thereto shall
be made available at all reasonable times at the office of the
Secretary of the Company to all Directors.
December 15, 1993
<PAGE> Exhibit (10)(iii)(A)11
AT&T Form 10-K
AT&T SENIOR MANAGEMENT
INCENTIVE AWARD DEFERRAL PLAN
(as amended December 18, 1991)
1. Eligibility
Any Senior Manager (as defined in the AT&T 1987 Long
Term Incentive Program [the "1987 Plan"]) of American Telephone
and Telegraph Company ("AT&T") or an Affiliate (as defined in the
1987 Plan) who is eligible for an award under the AT&T Short Term
Incentive Plan (the "Short Term Incentive Plan") and/or who has
been granted a Performance Award under the AT&T Senior Management
Long Term Incentive Plan (the "Long Term Incentive Plan") or the
1987 Plan, or who is eligible for an award under the AT&T
Paradyne GMT Short Term Incentive Plan (the "Paradyne Plan"),
shall be eligible to participate in this AT&T Senior Management
Incentive Award Deferral Plan (the "Plan"). For purposes of the
Plan, AT&T and any Affiliate shall be referred to as a
"Participating Company". Prior to January 1, 1984, the Plan was
named the Bell System Senior Management Incentive Award Deferral
Plan.
2. Participation
(a) Prior to the beginning of any calendar year, any
Senior Manager may elect to participate in the Plan by directing
that (i) all or part of the awards under the Short Term Incentive
<PAGE>
Plan or the Paradyne Plan, or the Performance Awards under the
Long Term Incentive Plan or the 1987 Plan and/or (ii) all or part
of the dividend equivalent payments under the Long Term Incentive
Plan or the 1987 Plan, which such employee's Participating
Company would otherwise pay currently to such employee in such
calendar year and subsequent calendar years, shall be credited to
a deferred account subject to the terms of the Plan. However, in
no event shall the part of an award under any plan credited
during any calendar year be less than $1,000 (based on a
valuation at the time the award would otherwise be paid). There
shall be no such minimum limitation on amounts credited during
any calendar year that are related to dividend equivalent
payments.
(b) Such an election to participate in the Plan shall
be in the form of a document executed by the employee and filed
with the employee's Participating Company. An election related
to awards and/or dividend equivalent payments otherwise payable
currently in any calendar year shall become irrevocable on the
last day prior to the beginning of such calendar year.
(c) An election shall continue until the employee
terminates or modifies such election by written notice. Any such
termination or modification shall become effective as of the end
of the calendar year in which such notice is given with respect
to all awards and/or dividend equivalents otherwise payable in
subsequent calendar years.
-2-
<PAGE>
(d) An eligible employee who has filed a termination of
election may thereafter again file an election to participate
with respect to awards and/or dividend equivalent payments
otherwise payable in calendar years subsequent to the filing of
such election.
3. Deferred Accounts
(a) (i) Deferred amounts related to awards and/or
dividend equivalent payments which would otherwise have been
distributed in cash by a Participating Company shall be credited
to the employee's account and shall bear interest from the date
the awards and/or dividend equivalent payments would otherwise
have been paid. The interest credited to the account will be
compounded at the end of each calendar quarter, and the annual
rate of interest applied at the end of any calendar quarter shall
be determined by the AT&T Board of Directors from time to time.
(ii) Furthermore, if an employee made an election
described in Section 2, which election was effective on
December 31, 1983, then such employee's account shall also be
credited during 1984 with an amount equal to the deferred amounts
which would have been credited to the employee's account during
1984 had the company which employed the employee on
December 31, 1983 continued to be a Participating Company during
1984, and such amount shall bear interest in accordance with
(a)(i) above from the date such amount would have been credited
-3-
<PAGE>
had such company continued to be a Participating Company during
1984.
(b) Deferred amounts related to awards which would otherwise
have been distributed in AT&T common shares by a Participating
Company shall be credited to the employee's account as deferred
AT&T shares. Furthermore, if an employee made an election
described in Section 2, which election was effective on
December 31, 1983, then such employee's account shall also be
credited during 1984 with the deferred AT&T Shares which would
have been credited to the employee's account had the company
which employed the employee on December 31, 1983 continued to be
a Participating Company in the Plan and in the Long Term
Incentive Plan during 1984. The employee's account shall also be
credited on each dividend payment date for AT&T shares with an
amount equivalent to the dividend payable on the number of AT&T
common shares equal to the number of deferred AT&T shares in the
employee's account on the record date for such dividend. Such
amount shall then be converted to a number of additional deferred
AT&T shares determined by dividing such amount by the price of
AT&T common shares, as determined in the following sentence. The
price of AT&T common shares related to any dividend payment date
shall be the average of the daily high and low sale prices of
AT&T common shares on the New York Stock Exchange ("NYSE") for
the period of five trading days ending on such dividend payment
date,
-4-
<PAGE>
or the period of five trading days immediately preceding such
dividend payment date if the NYSE is closed on the dividend
payment date.
(c) In the event of any change in outstanding AT&T common
shares by reason of any stock dividend or split,
recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change, the AT&T Board of
Directors shall make such adjustments, if any, that it deems
appropriate in the number of deferred AT&T shares then credited
to employees' accounts. Any and all such adjustments shall be
conclusive and binding upon all parties concerned.
4. Distribution
(a) At the time an eligible employee makes an election
to participate in the Plan, the employee shall also make an
election with respect to the distribution (during the employee's
lifetime or in the event of the employee's death) of the amounts
credited to the employee's deferred account. Such an election
related to awards otherwise payable currently in any calendar
year shall become irrevocable on the last day prior to the
beginning of such calendar year. Amounts credited as cash plus
accumulated interest shall be distributed in cash; amounts
credited as deferred AT&T shares shall be distributed in the form
of an equal number of AT&T common shares.
-5-
<PAGE>
(b) An employee may elect to receive the amounts
credited to the employee's account in one payment or in some
other number of approximately equal annual installments (not
exceeding 20), provided however, that the number of annual
installments may not extend beyond the life expectancy of the
employee, determined as of the date the first installment is
paid. The employee's election shall also specify that the first
installment (or the single payment if the employee has so
elected) shall be paid either (1) on the first day of the
calendar quarter next following the end of the month in which the
employee attains the age specified in such election, which age
shall not be earlier than age 55 or later than age 70-1/2, or (2)
on the first day of the calendar quarter next following the end
of the month in which the employee retires from a Participating
Company or otherwise terminates employment with any Participating
Company (except for a transfer to another Participating Company).
(c) Notwithstanding an election pursuant to Paragraph
(b) of this Section 4, the entire amount then credited to an
employee's account shall be paid immediately in a single payment
(a) if the employee is discharged for cause by his or her
Participating Company, (b) if the Board of Directors of such
Participating Company determined that the employee engaged in
misconduct in connection with the employee's employment with the
Participating Company, (c) if the employee without the consent of
-6-
<PAGE>
the Board of Directors of his or her Participating Company, while
employed by such Participating Company or after the termination
of such employment, becomes associated with, employed by, or
renders services to, or owns an interest in, any business that is
in competition with any Participating Company or with any
business in which a Participating Company has a substantial
interest (other than as a shareholder with a non-substantial
interest in such business), or (d) the employee becomes employed
by a governmental agency having jurisdiction over the activities
of a Participating Company or any of its subsidiaries.
(d) An employee may elect that, in the event the
employee should die before full payment of all amounts credited
to the employee's account, the balance of the deferred amounts
shall be distributed in one payment or in some other number of
approximately equal annual installments (not exceeding 10) to the
beneficiary or beneficiaries designated in writing by the
employee, or if no designation has been made, to the estate of
the employee. The first installment (or the single payment if
the employee has so elected) shall be paid on the first day of
the calendar quarter next following the month of death.
(e) Installments subsequent to the first installment to
the employee, or to a beneficiary or to the employee's estate,
shall be paid on the first day of the applicable calendar quarter
in each succeeding calendar year until the entire amount credited
-7-
<PAGE>
to the employee's deferred account shall have been paid.
Deferred amounts held pending distribution shall continue to be
credited with interest or additional deferred AT&T shares, as
applicable, determined in accordance with Section 3(a) and (b).
(f) In the event an employee, or the employee's
beneficiary after the employee's death, incurs a severe financial
hardship, the AT&T Board of Directors or the Compensation
Committee of such Board, in its sole discretion, may accelerate
or otherwise revise the payment schedule from the employee's
account to the extent reasonably necessary to eliminate the
severe financial hardship. For the purpose of this subsection
(f), a severe financial hardship must have been caused by an
accident, illness, or other event beyond the control of the
employee or, if applicable, the beneficiary.
(g) The obligation to make a distribution of deferred
amounts credited to an employee's account during any calendar
year plus the additional amounts credited on such deferred
amounts pursuant to Section 3(a) and (b) shall be borne by the
Participating Company which otherwise would have paid the related
award currently. However, the obligation to make distribution
with respect to deferred amounts which are related to amounts
credited to an employee's account under Section 3(a)(ii) and
under the second sentence of Section 3(b), and with respect to
-8-
<PAGE>
which no Participating Company would otherwise have paid the
related award currently, shall be borne by the Participating
Company which employed the employee on January 1, 1984.
5. Miscellaneous
(a) The deferred amounts shall be held in the general
funds of the Participating Companies. The Participating
Companies shall not be required to reserve, or otherwise set
aside, funds for the payment of such amounts.
(b) The rights of an employee to any deferred amounts
plus the additional amounts credited pursuant to Section 3(a) and
(b) shall not be subject to assignment by the employee.
(c) The Senior Vice President - Human Resources of AT&T
shall have the authority to administer and to interpret the Plan.
(d) The AT&T Board of Directors may at any time amend
the Plan or terminate the Plan, but such amendment or termination
shall not adversely affect the rights of any employee, without
his or her consent, to any benefit under the Plan to which such
employee may have previously become entitled prior to the
effective date of such amendment or termination. The Senior Vice
President - Human Resources of AT&T with the concurrence of the
Senior Vice President and General Counsel of AT&T shall be
authorized to make minor or administrative changes to the Plan,
as well as amendments required by applicable federal or state law
(or authorized or made desirable by such statutes).
-9-
<PAGE> Exhibit (10)(iii)(A)(15)
AT&T Form 10-K
PENSION PLAN
FOR
AT&T NON-EMPLOYEE DIRECTORS
(Revised February 20, 1989)
<PAGE>
PENSION PLAN FOR AT&T NON-EMPLOYEE DIRECTORS
TABLE OF CONTENTS
SECTION 1. STATEMENT OF PURPOSE 1
SECTION 2. DEFINITIONS 1
SECTION 3. ADMINISTRATION 3
SECTION 4. NON-EMPLOYEE DIRECTOR BENEFITS 5
1. Participation 5
2. Mandatory Retirement Age 5
3. Eligibility 6
a. Service Benefit 6
b. Disability Benefit 6
4. Benefits Amounts 6
a. Service Benefit 6
b. Disability Benefit 7
c. Payment Periods 7
d. Duration of Payments 7
SECTION 5. GENERAL PROVISIONS 8
SECTION 6. PLAN MODIFICATION 10
<PAGE>
SECTION 1. STATEMENT OF PURPOSE
The purpose of the Pension Plan for AT&T Non-Employee
Directors is to provide pension payments to such non-employee
members of the AT&T Board of Directors, pursuant to the terms and
conditions of this Plan.
SECTION 2. DEFINITIONS
1. The words "AT&T" or "Company" shall mean the American
Telephone and Telegrah Company, New York Corporation, or its
successors.
2. The words "Chairman of the Board," "President" and
"Board of Directors" or "Board" shall mean the Chairman of the
Board of Directors, the President and the Board of Directors,
respectively, of the Company.
3. The word "Committee" shall mean the Employees' Benefit
Committee appointed by the Company to administer or arrange for
the administration of the Plan (and which also administers the
Pension Plan).
4. The term "Mandatory Retirement Age" shall mean age
seventy (70).
- 1 -
<PAGE>
5. The terms "Non-Employee Director" or "Participant" shall
mean a member of the Company's Board of Directors on or after
January 1, 1987, who is not at time of retirement from service on
the Board, nor was ever, employed as a Senior Manager of AT&T or
any subsidiary or affiliate of AT&T.
6. The term "Pension Act" shall mean the Employee
Retirement Income Security Act of 1974 (ERISA) as may be amended
from time to time.
7. The term "Pension Plan" shall mean the AT&T Management
Pension Plan.
8. The word "Plan" shall mean this Pension Plan for Non-
Employee Directors.
9. The term "Retainer" shall mean the annual amount payable
to a Non-Employee Director as compensation for service on the
Board, excluding any additional compensation earned for service
as Committee Chairman, and all meeting fees, whether for Board or
Committee meetings.
10. The term "Senior Manager" shall mean an employee of the
Company who holds at the time of employment termination a
position that the Company's Board of Directors or Committee of
such Board has designated to be within the Senior Management
Group.
- 2 -
<PAGE>
11. The use in the Plan of personal pronouns of the
masculine gender is intended to include both the masculine and
feminine genders.
12. The use in the Plan of singular or plural nouns is
intended to have individual or collective meaning as applicable
to the context as used therein and is in no way to be construed
narrowly or such as to limit the Plan or any of its provisions.
SECTION 3. ADMINISTRATION
1. The Company shall be considered the Sponsor of the Plan
as that term is defined in the Pension Act. The Company shall
appoint the Employees' Benefit Committee to administer the Plan
("Committee"). The Committee shall have the administrative
responsibilities set forth below.
2. The Committee shall have the specific powers elsewhere
herein granted to it and shall have such other powers as may be
necessary in order to enable it to administer the Plan, except
for powers herein specifically granted or provided to be granted
to others.
3. The procedures for the adoption of by-laws and rules of
procedure for the employment of a Secretary and assistants with
- 3 -
<PAGE>
authority relating to claims of Participants, shall be the same
as the procedures set forth in the Pension Plan. The Secretary
is hereby designated as agent for service of legal process with
respect to any claims arising under the Plan.
4. The Committee shall grant or deny claims for benefits
under the Plan and shall authorize disbursements according to the
Plan. Adequate notice, pursuant to applicable law and prescribed
Company practices, shall be provided in writing to any
Participant whose claim has been denied setting forth the
specific reasons for such denial.
5. The review and appeal procedures for claims for
entitlements under the Plan shall be the same as those procedures
set forth in the Pension Plan.
6. The Committee shall determine conclusively for all
parties all questions arising in the administration of the Plan,
and any decision of such Committee shall not be subject to
further review.
7. The expenses of the Committee in administering the Plan
shall be borne by the Company.
8. The Company and the Committee are each a named fiduciary
as that term is used in the Pension Act with respect to the
- 4 -
<PAGE>
particular duties and responsibilities herein provided to be
allocated to each of them.
9. The Company may allocate responsibilities for the
operation and administration of the Plan consistent with the
Plan's terms. The Company and other named fiduciaries may
designate in writing other persons to carry out their respective
responsibilities under the Plan and may employ persons to advise
them with regard to any such responsibilities.
10. Any person or group of persons may serve in more than
one fiduciary capacity with respect to the Plan.
SECTION 4. NON-EMPLOYEE DIRECTOR BENEFITS
1. Participation. All persons who are Non-Employee
Directors, as defined in Section 2 of the Plan, are deemed
participants in this Plan.
2. Mandatory Retirement Age. Each Non-Employee Director,
whether or not eligible for benefits under the Plan, shall cease
to be eligible for continued service on the Board no later than
the date of the annual meeting of shareholders next following the
date on which such Non-Employee Director attains the Mandatory
Retirement Age.
- 5 -
<PAGE>
3. Eligibility.
a) Service Benefit. Subject to the provisions set forth
elsewhere in this Plan, a Participant who has served a minimum of
five (5) years on the Board is eligible for a Service Benefit
pursuant to Section 4 of the Plan and will become fully vested in
all benefits under the Plan at that time.
b) Disability Benefit. In the event a Non-Employee Director
becomes disabled, as defined according to the terms of the
Pension Plan (except for provisions requiring fifteen (15) years
of employment for eligibility), before becoming fully vested in
all benefits under the Plan pursuant to Section 4.3(a) above, the
Board, in its sole discretion, may authorize the payment of a
Disability Benefit pursuant to Section 4.4(b) of this Plan. The
Board may require the Participant to furnish from time to time
proof of continued disability.
4. Benefit Amounts.
a) Service Benefits. The annual benefit of each eligible
Non-Employee Director who retires on or after January 1, 1987,
shall equal the amount of such Non-Employee Director's annual
Retainer in effect as of retirement from service on the Board.
Such annual benefit shall be payable in a lump sum each January
(for the applicable year, in advance) following commencement of
benefits, as specified in subparagraph 4(d) below.
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<PAGE>
b) Disability Benefit. At the full discretion of the Board,
Disability Benefit payments for eligible Participants shall be
paid in an amount and pursuant to the same terms and conditions
as are set forth in Section 4.4(a) of this Plan, or in such other
amounts, terms and conditions as determined by the Board.
c) Payment Periods. Service and Disability pension benefits
payable under this Section 4 of the Plan shall commence at such
time as is specified in subparagraph 4(d) below and be payable
annually in a lump sum each January of the year for which paid or
at such other periods as the Committee may determine in each
case.
d) Duration of Payments. Except as may be otherwise
determined by the Company, Service and Disability Benefits
granted under this Section 4 of the Plan shall commence on the
January next following the date of each Participant's seventieth
(70) birthday whether actual termination of service occurred
prior to age 70 or at such other time as is herein provided for
payment of a Disability Benefit, and shall continue only to the
death of such Participant, at which time all benefit entitlements
under this Plan shall cease.
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<PAGE>
SECTION 5. GENERAL PROVISIONS
1. Effective Date. This Plan is effective December 16,
1987 for Participants who are actively serving on the Board on or
after January 1, 1987.
2. Right to Benefits. Subject to the provision of Section
5.3 below, all Participants who have satisfied the Eligibility
provision contained in Section 4.3 above, whether or not
currently receiving benefits under the Plan, shall have
nonforfeitable and noncancellable rights in all benefits provided
pursuant to this Plan.
3. Forfeiture of Benefits. Notwithstanding eligibility or
right to benefits of a Participant under any provision or
paragraph of the Plan, all benefits for which a Participant would
be otherwise eligible hereunder may be forfeited, at the
discretion of the Board or based on a recommendation of the AT&T
Management Committee of the Company, as applicable, when such
Participant (i) engages in misconduct in connection with the
Participant's service on the Board (as determined by the Board):
(ii) without the Company's consent becomes associated with,
employed by or renders services to, or owns an interest in, any
business that is competitive with the Company or with any
business with which AT&T has a substantial interest (other than
as a shareholder with a nonsubstantial interest in such business)
- 8 -
<PAGE>
as determined by the AT&T Board; or (iii) engages in activity in
conflict with or adverse to the interests of the Company under
the standards of the AT&T Non-Competition Guideline and as
determined by the AT&T Management Committee.
4. Assignment or Alienation. Assignment or alienation of
any and all benefits under the Plan will not be permitted or
recognized except as otherwise required by law.
5. Determination of Eligibility. In all questions relating
to eligibility for any benefit hereunder the decision of the
Committee based upon the Plan and upon the records of the Company
and insofar as permitted by applicable law, shall be final.
6. Method of Payment. Payments under the Plan shall be
made in the same manner as set forth under the Pension Plan. All
benefits payable pursuant to the Plan shall be paid from Company
operating expenses or through the purchase of insurance from an
insurance company, as the Company may determine.
7. Amounts Accrued Prior to Death. Benefit amounts accrued
but not actually paid at the time of death of a Participant shall
be paid in a lump sum within sixty (60) days of the Participant's
death in accordance with the standards and procedures under the
Pension Plan.
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<PAGE>
8. Payments to Others. Benefits payable to a Participant
unable to execute a proper receipt may be paid to other person(s)
in accordance with the standards and procedures set forth in the
Pension Plan.
9. Damage Claims or Suits. Should any Participant in the
Plan commence litigation against the Company or any successor
thereof regarding the alleged violation by the Company or any
successor of the nonforfeitability, non-cancellation and vesting
provisions of the Plan, the Company or any successor which is the
defendant in any such lawsuit shall pay all costs and expenses
(including attorney fees) of any such Participant unless (1) the
court in which the litigation is filed or any higher court to
which an appeal is taken finds the Company or successor to be
without liability on material substantive issues raised in the
lawsuit or (2) the lawsuit is frivolous in nature.
SECTION 6. PLAN MODIFICATION.
The Board may from time to time make changes in the Plan and
the Board may terminate the Plan as it deems appropriate, without
notice to Participants. In addition, the Senior Vice President -
Personnel of AT&T (or any successor to that officer's
responsibilities) with the concurrence of the Senior Vice
President and General Counsel of AT&T (or any successor to that
officer's responsibilities) shall be authorized to make minor or
- 10 -
<PAGE>
administrative amendments to the Plan, as well as amendments
required by applicable federal or state law (or authorized or
made desirable by such statutes). Such amendments or termination
shall not affect the rights of any Participant without his
written consent, to any benefit under the Plan to which such
Participant may have previously become entitled as a result of
Disability or Service on the Board which occurred prior to the
effective date of such amendment or termination.
- 11 -
<PAGE> EXHIBIT(10)(iii)(A)18
AT&T Form 10-K
7/31/91
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1991, by and between the
American Telephone and Telegraph Company, A New York Corporation with its
headquarters at 550 Madison Avenue, New York, New York 10022 (hereinafter
called the "Company"), and Alex J. Mandl (hereinafter called the
"Employee").
WHEREAS the Employee was employed as a senior executive with
another company; and
WHEREAS the Employee has accepted employment with the
Company; and
WHEREAS the Company has assigned and appointed the Employee to a
Senior Management position as Chief Financial Officer and Group Executive.
In such capacity, Employee would report to the Chairman and be a member of
the Company's Executive Committee; and
WHEREAS, it is of special importance for the Company to mitigate
the impact of early departure from the Employee's prior employer;
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<PAGE>
NOW, therefore, for and in consideration of the promises and the
mutual agreements hereinafter contained, the Company and Employee do hereby
agree as follows:
1. Employment. Subject to the provisions set forth elsewhere
in this Agreement, the Company hereby employs the Employee and the Employee
hereby accepts employment with the Company as a Senior Manager for the term
set forth in Section 2 of this Agreement. Employee represents and warrants
that there are no agreements or arrangements, whether written or oral, in
effect which would prevent him from rendering exclusive services to the
Company during the term hereof, and that he has not made and will not make
any commitment, agreement or arrangement, or do any act in conflict with
this Agreement. Such employment shall be upon the terms and conditions
hereinafter contained.
2. Term of Agreement. The term of employment hereunder shall
be at the will of each party to this Agreement and subject to the terms and
conditions thereof commencing on August 1, 1991. Except as expressly set
forth herein, the Employee shall have no further rights or entitlements
beyond the terms of this Agreement, including but not limited to the right
of continued employment.
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<PAGE>
3. Employee's Compensation and Benefits. Except as otherwise
provided in this Agreement and as more fully set forth hereinbelow, the
Employee shall be treated in the same manner as and be entitled to such
benefits and other perquisites and terms and conditions of employment as
other Senior Managers of the Company at a similar level and with comparable
responsibilities.
(a) Base Salary. The Company agrees to pay and the
Employee agrees to accept for services to be rendered hereunder and during
the term of this Agreement a base salary of not less than $450,000.00 per
year, payable in installments on a monthly or other periodic basis in
accordance with the prevailing payroll practices of the Company.
(b) Perquisites. During the term of this Agreement, the
company shall (i) provide the Employee with perquisites of employment as
are commonly provided to an Employee of the Company at a similar level and
with comparable responsibilities, and (ii) reimburse the Employee for
reasonable and necessary business expenses incurred in connection with his
employment, in accordance with employee business expense practices
applicable to employees of the company at a similar level and with
comparable responsibilities.
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<PAGE>
(c) Benefits. Subject to the terms and provisions of this
Agreement, the Employee shall be entitled to coverage under or benefits in
accordance with those employee and Senior Management benefit plans and
programs as are made available or which may subsequently become applicable
to other Senior Managers of the Company at comparable levels. The Employee
shall be entitled to five (5) weeks of annual vacation applicable to 1991
and subsequent years. The Employee shall also be entitled to relocate
under the terms of the AT&T Management Relocation Plan. Moreover, the AT&T
Management Relocation Plan provision which calls for a participant to
complete his relocation within 12 months of his employment date will be
extended to 24 months for Employee.
(d) Incentive Plans. During the term of this Agreement, the Employee
will be eligible for consideration for both long and short term awards
pursuant to the terms of the Company's 1987 Long Term Incentive Program and
short-term annual incentive arrangements, respectively, (the "Incentive
Plans") under the terms of such Incentive Plans as are in effect from time
to time. Short-term annual incentives for AT&T Senior Managers currently
take the form of AT&T Performance Awards (APA) and Merit Awards (MA).
Award levels under the APA program are predicated on overall corporate
performance and award levels under the MA program are determined by
individual and team contributions. The Company cannot make any definitive
representations regarding the continuation of the APA/MA incentive format,
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<PAGE>
or the size of Employee's APA and MA awards in any given year, if any. The
following information, however, will provide a frame of reference regarding
the potential size of Employee's annual incentive opportunity. Employee's
1991 Standard APA is $201,000 and Standard MA is $72,000. Actual APA and
MA awards paid to individual Senior Managers are determined with reference
to such Standard Awards. For example, the APA payouts for performance
years 1988, 1989 and 1990 were 117%, 119.9% and 126.6%, respectively.
Moreover, based on annualized Company performance through the end of the
second quarter, the projected 1991 APA Award for a Senior Manager with a
$201,000 Standard APA Award would be $260,300 (i.e., 129.5% of such
Standard APA Award). A Senior Manager's actual MA is determined by his/her
supervisor. Although there are no specified minimum or maximum amounts
governing the size of such individual awards, the pool of funds available
for such awards in 1991 is limited to 36% of the sum of actual APA awards
made to each Senior Manager. Employee's actual 1991 APA and MA, if any,
will not be prorated to reflect partial service in such year.
The Company will award 8,195 Performance Shares to the Employee
as of the effective date of the Agreement under the Company's 1987 Long
Term Incentive Program covering the 1991-1993 performance period. In
addition and in accordance with the terms of this award, the Employee shall
receive quarterly Dividend Equivalents. Distributions of Long Term
Performance Shares will be in accordance with the applicable 1987 Long Term
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<PAGE>
Incentive Program and award provisions. Also, as of the effective date of
this Agreement, 19,987 Stock Options will be granted to the Employee under
the Company's 1987 Long Term Incentive Program. In addition to the above
awards of Performance Shares and Stock Options which represent the 1991
standard grants to a Senior Manager at Employee's level, the Company's
Compensation Committee of the Board will be asked at their next meeting
(scheduled for October 16, 1991) to approve a special grant of Company
Stock Options and Performance Shares. Specifically, such special grant
would include: (1) 7,766 Performance Shares attributable to the 1989-1991
performance period and 6,070 Performance Shares attributable to the 1990-92
performance period. Employee shall receive quarterly Dividend Equivalents
on these special Performance Share Awards. (2) 77,000 Stock Options, which
will become fully vested ("cliff" vesting) three years after such special
grant.
(e) Within thirty business days of his employment with the
Company, Employee will be provided a one-time lump sum hiring bonus of
$200,000. This hiring bonus will not be included in the base for
calculating any employee or Senior Management benefits.
(f) Successor Plans and Programs. In the event that after
the date of this Agreement the Company establishes any new, replacement or
additional pension, retirement, disability or annuity plans, programs or
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<PAGE>
practices of incentive compensation for Senior Managers of the Company at
comparable levels, the Employee shall also be eligible, at the Company's
discretion, for coverage under such pension, retirement, disability and
annuity plans, programs or incentive compensation practices in accordance
with the terms thereof.
4. Special Pension Arrangement
In the event the Employee's employment is terminated for any
reason other than for a Company-initiated termination for "Cause" (as
hereinafter defined) on or after Employee's 55th birthday, the Company
agrees to provide an immediate pension benefit based on (1) the greater of
the pension amounts reflected in Appendix A or (2) actual Company Net
Credited Service and calculated under the then-existing Company qualified
and non-qualified pension formulas, but without reference to age and
service eligibility requirements. Non-qualified pensions affected by these
practices would include those provided under the AT&T Non-Qualified Pension
Plan, the AT&T Mid-Career Pension Plan but specifically would exclude the
Minimum Retirement Benefit and Surviving Spouse Benefit payable under the
AT&T Senior Management Long-Term Disability and Survivor Protection Plan.
Special pension payments shall be paid to the Employee from company
operating income. The total pension amount which results from application
of this Section 4 will be reduced by all amounts actually received by
Employee under any other AT&T or subsidiary or affiliated company's
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<PAGE>
qualified or non-qualified pension, retirement, disability or annuity plan,
program or practice, except the AT&T Long-Term Savings Plan for Management
Employees and the AT&T Senior Management Incentive Award Deferral Plan.
Pension benefits payable under this Section 4 will be afforded the same "ad
hoc" inflation adjustments as may be applicable to the AT&T Non-Qualified
Pension Plan from time to time. Moreover, Employee's Company-paid senior
Management Basic Life Insurance Program ("SMBLIP") benefit, equal to one
times base salary, will be maintained after such termination as if Employee
was eligible for a Service Pension under the AT&T Management Pension Plan.
All other terms and conditions of the SMBLIP will continue to apply.
Moreover and pursuant to a termination under this Section 4, Employee will
be entitled to the following post-termination ancillary entitlements,
administered in a manner consistent with the then-current treatment of
service Pension eligible Senior Managers and in accordance with the terms
and conditions applicable to each Senior Management plan or practice:
- COBRA entitlements (as mandated by Federal statutes)
- 1 - 1-1/2 times base salary Senior Management Individual
Life Insurance (Split Dollar - contributory)
- Continuation of outstanding Company Stock Options and
Performance Shares
- Continuation of Senior Management Telephone Concession
Service
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<PAGE>
5. Powers and Duties. The Employee shall devote his full time,
interests and abilities to the performance of duties under this Agreement,
it being understood in connection therewith that he may, in his discretion
and subject to not interfering with his duties and responsibilities
hereunder, devote time to civic, public and professional activities and may
serve as a Director of other business corporations not engaged in
competition with the Company or any subsidiary or affiliate of the Company;
provided, however, that he shall not accept directorships on more than
three boards of other business corporations; and provided, further, that
for purposes of the immediately preceding clause, directorships on the
boards of two or more companies with at least 50% common ownership shall
count as a single company.
6. Operation of Agreement. Notwithstanding any other term or
provision to the contrary, all rights, benefits and entitlements available
under and in accordance with the terms of this Agreement, except for those
provided in Sections 4 and 8, are contingent and dependent upon the
Employee maintaining and continuing employment as a Senior Manager of the
Company.
7. Restrictive Covenants.
(a) Competition. Notwithstanding any other provisions of
this Agreement, any and all payments (except those made from Company-
sponsored Tax Qualified Pension or Welfare Plans), benefits or other
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<PAGE>
entitlements to which the Employee may be eligible in accordance with the
terms hereof, may be forfeited, whether or not in pay status, at the
discretion of the Company, if the Employee, at any time without the consent
of the Company is employed by, becomes associated with, renders service to,
or owns an interest in any business that is competitive with the Company,
any subsidiary or affiliate of the Company, or any business in which the
Company or any such subsidiary or affiliate has a substantial interest
(other than as a shareholder with a non-substantial interest in such
business), all as determined by the Company. Appendix B is a copy of the
Non-Competition Guideline.
(b) Confidentiality. The Employee agrees that he will not,
at any time during his employment pursuant to this Agreement or thereafter,
disclose or use any trade secret, proprietary or confidential information
of the Company or any subsidiary or affiliate of the Company, obtained
during the course of his employment, except as required in the course of
such employment or with the written permission of the Company or, as
applicable, any subsidiary or affiliate of the Company. Further, the
Employee agrees not to disclose or discuss the terms and provisions of this
Agreement with anyone except for his legal and financial advisors and
members of his immediate family.
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<PAGE>
The Employee agrees that at the time of the termination of his
employment with the Company, whether at the instance of the Employee or the
Company, and regardless of the reasons therefore, he will deliver to the
Company, and not keep or deliver to anyone else, any and all notes, files,
memoranda, papers and, in general, any and all physical matter containing
information, including any and all documents significant to the conduct of
the business of the Company or any subsidiary or affiliate of the Company,
except for any documents for which the Company or any subsidiary or
affiliate of the company has given written consent to removal at the time
of the termination of the Employee's employment.
(c) Violation by the Employee of any of the provisions of
this Section 7 may result, at the discretion of the Company, in the
cancellation of all rights and entitlements of the Employee hereunder and
shall give the Company any other rights it may have under applicable law to
restrict the use of any information and/or documents and/or for the return
of any such information and/or documents.
8. Termination Provisions.
(a) If at any time during the period beginning from the
effective date of this Agreement and ending on the day prior to the
Employee's 55th birthday, Employee is terminated by the Company for any
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<PAGE>
reason other than Cause, the Employee will be entitled to the greater of
(1) $450,000 or (2) 200% of Employee's annual base salary rate in effect as
of the date of Employee's termination.
(b) The Company may terminate the Employee for Cause after
written notice specifying the cause of such action shall have been given to
Employee by the Company. For purposes of this Agreement, Cause shall mean:
(i) Employee's breach of any of the terms of this
Agreement;
(ii) Employee's commission of act(s) or omission(s)
which have, have had, or are likely to have a
material adverse effect on the business,
operations, financial conditions or reputation of
the Company, its subsidiaries or affiliates;
(iii) Employee's conviction (including a plea of guilty
or nolo contenders) of a felony or any crime of
theft, dishonesty or moral turpitude;
(iv) Gross omission or gross dereliction of any
statutory or common law duty of loyalty to the
Company.
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<PAGE>
(c) If the Employee terminates his employment with the
Company at any time for personal or other reasons or if Employee dies or is
terminated because of long-term disability or is terminated by the Company
for Cause, as specified in Section 8(b) hereinabove, and except as provided
in Section 4 of this Agreement, he will be treated in the same manner as
any other Senior Manager of the Company without reference to any provision
of this Agreement.
(d) Any payments made pursuant to this Section 8 are: (1)
subject to the provisions, restrictions and limitations of section 7 above,
(2) payable in twelve (12) equal monthly installments commencing the month
after the month of termination and (3) subject to Employee signing a
standard Release and Agreement not to sue the Company then in use by the
Company in connection with terminated Senior Managers.
9. Dispute Resolution. At the option of the Employee or the
company, any dispute, controversy, or question arising under, out of or
relating to this Contract or the breach thereof, shall be referred for
decision by arbitration in the State of New Jersey by a neutral arbitrator
selected by the parties hereto. The proceeding shall be governed by the
Rules of the American Arbitration Association then in effect or such rules
last in effect (in the event such Association is no longer in existence).
If the parties are unable to agree upon such a neutral arbitrator within
thirty (30) days after each party has given the other written notice of the
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<PAGE>
desire to submit the dispute, controversy or question for decision as
aforesaid, then either party may apply to the American Arbitration
Association for the appointment of a neutral arbitrator, or, if such
Association is not then in existence or does not desire to act in the
matter, either party may apply to the Presiding Judge of the Superior court
of any county in New Jersey for the appointment of a neutral arbitrator to
hear the parties and settle the dispute, controversy or question, and such
Judge is hereby authorized to make such appointment. In the event that
either party exercises the right to submit a dispute arising hereunder to
arbitration, the decision of the neutral arbitrator shall be final,
conclusive and binding on all interested persons and no action at law or in
equity shall be instituted or, if instituted, further prosecuted by either
party other than to enforce the award of the neutral arbitrator.
In the event that the Employee is successful in pursuing any
claim or dispute arising out of this Contract, the Company shall pay all of
the Employee's attorneys' fees and costs, including the compensation and
expenses of any Arbitrator, unless (1) the Arbitrator, or any court in
which litigation is filed finds the Company to be without liability on
material issues raised or (2) the dispute or lawsuit is frivolous in
nature. In any other case, the Employee and the Company shall each bear
all their own costs and attorney fees, except that the Company shall pay
the costs of any Arbitrator appointed hereunder.
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<PAGE>
10. Assignment.
(a) Employee. This Agreement is a personal contract and
the rights and interests of the Employee hereunder may not be sold,
transferred, assigned, pledged or hypothecated by him.
(b) Company. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including but
not limited to any subsidiary or affiliate of the Company to which the
Employee may be employed or assigned, by or with the consent of the
Company. If the Employee is assigned to or becomes employed by any
subsidiary or affiliate of the Company during the term of this Agreement,
such subsidiary or affiliate shall be considered to have been assigned all
rights of the Company and accepted all obligations of the Company
hereunder.
11. Taxes. It is understood that all payments and benefits
provided under this Agreement are subject to withholding for applicable
federal, state and local income (or similar) taxes.
12. Entire Agreement; Amendments. This Agreement comprises 16
pages, 13 Sections and two (2) attached Appendices which represents the
entire Agreement between Employee and the Company in respect of the subject
matter contained herein and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representative of any
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<PAGE>
party hereto. No amendments or modifications to this Agreement may be made
except in writing signed by the Company, through its authorized
representative, and the Employee.
13. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and the Company has affixed its corporate seal as of the day and
year first above written.
Company:
By: H. W. Burlingame
Date: August 21, 1991
Witnessed: Ailene Durham
Date: August 21, 1991
Employee: Alex J. Mandl
Date: August 15, 1991
Witnessed: Mary Blessing
Date: August 15, 1991
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Appendix A
MINIMUM PENSION SCHEDULE
(Amounts Assume 50% Joint and Survivor Pension is not declined)*
Retirement Age# Total Monthly Pension**
--------------- ---------------------
55 $30,432
56 33,280
57 36,396
58 39,802
59 43,528
60 47,602
61 52,057
62 56,930
63 62,258
64 68,086
65 74,459
* If survivor annuity is declined, amounts will be increased to reflect
practices in effect upon employee's termination.
** The above Minimum Pension Schedule will be offset by the following:
(1) All AT&T or subsidiary or associated company's qualified and non-
qualified pension plans (e.g., AT&T Non-Qualified Pension Plan, AT&T
Mid-Career Pension Plan, AT&T Senior Management Long-Term Disability
and survivor Protection Plan), (2) any pensions payable from former
employers (i.e., Boise Cascade, CSX Corporation [and subsidiaries]).
If such offsets exceed the Minimum Pension amount, no benefit under
this schedule is payable. Qualified and non-qualified savings plans
are not offsets to the Minimum Pension Schedule, e.g., AT&T Long-Term
Savings Plan and AT&T Senior Management Incentive Award Deferral Plan.
# Minimum Pension amounts will be prorated to the nearest whole month.
7/31/91
<PAGE> EXHIBIT (10)(iii)(A)19
AT&T Form 10-K
LOGO
Harold W. Burlingame Room 444511
Senior Vice President 295 North Maple Avenue
Basking Ridge, NJ 07920
908 221-6033
Mr. Jerre Stead
71 Skyline Drive
Bernardsville, New Jersey 07924
Dear Jerre:
This will supplement my July 31, 1991 and October 18, 1991 letters to
you detailing the terms and conditions of your employment with AT&T. In line
with our previous discussions, the incentive arrangements described in the
"Special Incentive Program" section of Attachment A to my July 31, 1991
letter are null and void in their entirety. As a substitute for this
"Special Incentive Program", you have been awarded a total of 70,000 AT&T
Restricted Shares as reflected in the attached agreement.
Within 10 business days, you will receive a dividend equivalent check in
the amount of $115,500 this amount, in effect, assumes you were awarded the
70,000 Restricted Shares effective back to January 1, 1992, the start of the
performance period incorporated in the attached Restricted Share agreement.
Accordingly, it reflects four quarterly dividends through the December 31,
1992 dividend record date and related February 1, 1993 dividend payment date.
For the next dividend record date and related dividend payment date, (i.e.
March 31, 1993 and May 3, 1993) you will receive actual dividends rather than
dividend equivalents.
Your signature below will indicate your acceptance of this proposal.
Sincerely,
H. W. Burlingame
Attachment
Jerre L Stead 3/29/93
- ------------- -------
Jerre L. Stead Date
<PAGE>
LOGO
Harold W. Burlingame Room 29-3500
Senior Vice President 550 Madison Avenue
New York, NY 10022-3297
212-644-1000
October 18, 1991
M. Jerre L. Stead
71 Skyline Drive
Bernardsville, NJ 07924
Dear Jerre:
This will supplement my July 31, 1991 letter to you
detailing the terms and conditions of your employment with AT&T.
Subsequent to my July 31, 1991 letter, we advised you that
our Legal organization felt it was inappropriate for you to serve
on the board of directors of Household International as they
considered this organization a competitor of AT&T's Universal
Card business. We understand this means forgoing annual
compensation in the order of $31,000 per year plus 350 Household
International common shares.
In view of this situation, each year on the anniversary of
your employment with AT&T, you will receive a lump sum payment of
$51,000. These payments will not be included in the base for
calculating benefits under any AT&T employee or Senior Management
benefit plan and will cease the earlier of (1) such time as you
secure a position on the board of a company not in competition
with AT&T or (2) termination of your employment with AT&T. A
final prorated payment will be made on the number of completed
business days for a partially completed 12-month period.
Your signature below will indicate your acceptance of this
addition to the terms of your employment.
Sincerely,
Harold W. Burlingame
Jerre L. Stead October 27, 1991
- -------------- ----------------
Jerre L. Stead Date
<PAGE>
LOGO
Harold W. Burlingame Room 29-3314
Senior Vice President 55 Madison Avenue
New York, NY 10022-3297
July 31, 1991
Mr. Jerre L. Stead
110 Rolling Green Drive
Barrington IL 60010
Dear Jerre:
It gives me great pleasure to offer you a Senior
Management position as President of AT&T's Business
Communications Systems.
In addition to confirming my offer, this letter will
further detail the terms and conditions of your employment and
outline the major features of AT&T's compensation and benefit
plans and practices as well as the arrangements we developed
especially for you.
SALARY AND INCENTIVES: Attachment A outlines the salary and
incentive arrangements we are offering to you. As
discussed, your current employer may not be granting you a
prorated annual incentive for 1991. If such is the case,
your 1991 AT&T annual incentives (APA and MA) will not be
prorated to reflect a partial years' service here.
HIRING BONUS: You will receive a hiring bonus of $380,000
payable within 30 days of your employment date. This
payment is to compensate you for certain forfeitures when
you leave your current employer. This payment will not be
includable in the calculation of any benefits under the
benefit plans of AT&T. In addition, at their next meeting,
the AT&T Board's Compensation Committee will be requested to
award you a special grant of 15,700 AT&T Shares.
EMPLOYEE AND SPECIAL MID-CAREER BENEFITS: You will be
eligible to be relocated from Barrington, Illinois to the
Basking Ridge, New Jersey area under the AT&T Management
Relocation Program. This Program includes a Miscellaneous
Allowance equal to 10% of your starting base salary.
(Attachment B is an outline of AT&T's Management Relocation
Plan.) If you decide to join us, we will make arrangements
to have a counselor immediately available to assist you with
your relocation and we will assist you in securing a
mortgage.
<PAGE>
-2-
You will, of course be eligible for the employee benefit
programs available to all management employees. In
addition, under the terms of the AT&T Mid-Career Hire
Program, you would be entitled to a one-time payment
(grossed up to reflect taxes) equivalent to six months'
premiums for the Company Medical and Dental Plans. Although
you will have to make your own arrangement for dental
coverage during your first six months, you may immediately
enroll (and pay for coverage) under the Company's Medical
Expense Plan. After this initial six month period, you will
be eligible for the Company paid medical, dental, and vision
care coverage provided to all management employees.
Attachment C summarizes how the Mid-Career Program's
medical, death and disability benefits combine with our
general employee benefit plans to protect you and your
family in these important areas. In addition, this
attachment outlines the features of the AT&T Savings Plans
as well as our Senior Management financial counseling and
telephone concession programs, which are also available to
you.
AT&T MID-CAREER PENSION PLAN: Under the Plan's current
terms and conditions, a participant hired at age 48 and
retiring at age 65 would receive extra pension credit for 16
years at approximately one half the rate under the AT&T
Management Pension Plan. See also Special Pension
Arrangement.
SPECIAL PENSION ARRANGEMENT: This arrangement would provide
you with special Ancillary Post-Termination Benefits and a
Special Pension Arrangement in the event of (1) an employee
initiated termination or (2) a Company initiated termination
(other than for cause), on or after age 55 (but prior to age
65, the age you would normally become eligible for immediate
pension benefits).
-- Ancillary Post-Termination Benefits:
- COBRA entitlements
- 1 times salary Senior Management "Basic" life
insurance
- 1-1 1/2 times salary Senior Management "Split Dollar"
(contributory) life insurance
- Same ad-hoc inflation adjustments accorded to AT&T
Non-Qualified "Service Pensioners"
- Continuation of outstanding Stock Options and
Performance Shares if such treatment continues to be
available to Service Pension eligible Senior
Managers.
- Senior Management telephone concession service
<PAGE>
-3-
-- Special Pension Arrangement:
- Provided you remain employed with AT&T until at least
age 55, you will receive an accrued pension benefit
payable immediately upon retirement. Such accrued
pension benefit will be calculated under then existing
AT&T qualified and non-qualified pension formulas
(including the AT&T Mid Career Pension Plan) using
actual AT&T service at termination but ignoring age and
service requirements. (However, the age and service
requirements for the Minimum Retirement Benefit and
Surviving Spouse Benefit payable under the AT&T Senior
Management Long Term Disability and Survivor Protection
Plan will not be waived.) In the event such accrued
pension amounts are lower than a minimum annual pension
schedule reflected in Attachment D, you will receive
the higher pension amount called for in this Minimum
Pension Schedule. Of course, such minimum annual
pension will be reduced by any actual AT&T qualified
and non-qualified pensions payable to you as well as
the other offsets indicated in Attachment D.
Since I will be abroad for two weeks, if you have any
questions concerning this offer, please call Rich Evans on 908-
221-2112.
This letter completely replaces my July 29, 1991 offer
letter to you. Your signature below will indicate your
acceptance of this offer.
Sincerely,
Rich Evens for HWB
Attachments
Jerre L. Stead 8/9/91
- -------------- ------
Jerre L. Stead Date
<PAGE>
Attachment A
JERRE L. STEAD
Current Proposed
Target Max Target Per-to-Date
------ --- ------ -----------
Annual Base Salary: $ 600 $ 600 $ 550 $ 550
1991 AT&T Performance
Award (APA): 258 334
191 Merit Award (MA): 450 600 93 120
----- ----- ------ -----
Total Cash Compensation: $1050 $1200 $ 901 $1004
Long Term Incentives-
Standard 1991 Grants: 540 780
- - 1991-1993 Performance
Shares (PV of 10640
Shares) 396 534
- - Annual Dividend
Equivalents 14
- - 1991 Stock Options
(PV of 25,970 Options) 395 395
Total Compensation: $1590 $1980 $1692 $1933
Seasoned Performance Shares
- - 1990-1992 (7888 Shares) 360 289
- - 1989-1991 (10,104 Shares) 350 364
SPECIAL INCENTIVE PROGRAM:
3- year program ties to performance of Mr. Stead's business.
- - Incremental earnings opportunity during the period:
For achievements of each $100MM* in position MOI (i.e., MOI improvements
break even):
$200K cash payment
150K 5-yr restricted stock
<PAGE>
For each achievement of specified improvements in key non-MOI measures such as
net operating cash flow (NOCF), R&D expenditures as a percent of sales,
customer satisfaction index, etc.:
$200K cash payment
150K 5-yr restricted
Residual earnings opportunity:
- -Achievement of target MOI by end of period: $700K cash
- -Achievement of target non-MOI measures by
end of period: $700K cash
- -Payable when achieved
*Example target; actual targets to be jointly agreed to by Mr. Stead and AT&T.
Plan design will produce a target earnings potential of $3.5MM over the period
($70OK/year incremental bonuses + $1.4MM residual bonus). Additional earnings
potential for above-target performance will be available and, if earned, would
be delivered in restricted stock at the end of the performance period.
NOTES: Performance share and stock option present values assume 12%/year
stock price growth for 5 years and an 8.5% discount rate.
Performance-to-date figures for performance shares based on $38.00
share price and results through 2Q.
Does not account for any accrued forfeitures which may be
incurred.
<PAGE>
Attachment B
OUTLINE OF MANAGEMENT RELOCATION PLAN
Lump Sum Payment Paid in advance based on an individual formula which
includes home search trips, interim living costs,
meals, transportation, lodging, etc., for employee and
family.
Miscellaneous
Household Allowance 10% of new salary*
Home Sale Assistance I Sale to Company at fair market value as
determined by the average of two professional
appraisals
II If employee finds buyer, 3% of the sale price is
paid to the employee as an incentive
Loss On Sale of Home Limited to the lower of the actual loss or 10% of the
sum of the original purchase price and one-half of
eligible capital improvements to the home
Loan for Down Payment
(Equity Advance) Interest free loan up to 95% of equity in prior home
Closing Cost Most fees paid, e.g., attorneys, recording, mortgage
origination, etc.
Moving/Storage Packing, moving household goods and unpacking
Differentials If applicable, the greater of a Mortgage Interest
Differential or High Housing Cost Differential, prior
house to new house, for 36 months. Maximum aggregate
payment equal to 30% and 10.8% of salary, respectively
Difference in real estate taxes, prior house to new
house, for 36 months, no maximum
Tax Gross-up For non-deductible moving expense reimbursements
(Misc. Allowance, Home Sale Incentive and
Differentials not included)
*6% of new salary if renting at the new location
The above is only a brief outline of such benefits. Any benefits or rights
will be determined by the specific plan provisions as they apply in each case.
<PAGE>
Attachment C
BENEFIT SUMMARY#
MEDICAL Coverage and tax gross-up during first six months ...
thereafter, eligible to Medical@, Dental@, Vision Care
Plans for employees generally
DEATH BENEFITS Minimum 15% of Pay* for spouse's life-time until
pension plan for employees generally exceeds such
percentage
- 1 x Salary Company Paid Basic Life Insurance
- 1 x Pay* Company Paid Pension Death Benefit to
mandatory beneficiary
- Up to 3 x Salary Employee Paid Group Term
- Up to 1 and 1/2 x Salary Company/Employee Paid
"Split Dollar" Insurance
SICKNESS DISABILITY 52 weeks at full Salary
LONG TERM DISABILITY 60% of Salary LTD benefit to age 65 provided by the
Company or option to elect 70% with employee
contribution for the additional 10%
VACATIONS 5 weeks
SAVINGS PLAN After one year's service, Company matches 2/3 of
employee contribution up to 6% of Salary (Plan
includes pretax 401k feature)
DEFERRAL PLAN Option to defer Short and Long Term Incentives.
Current interest rate is 10 year U.S. Treasury notes
plus 5% interest**
FINANCIAL COUNSELING Tax, estate planning and investment advice Preparation
of will and trusts Income tax preparation
TELEPHONE CONCESSION 100% of inter-LATA long distance charges
AUTOMOBILE Company provided leased automobile or chauffeur
service for business and commutation
PENSION See AT&T MID-CAREER PENSION
# Includes Mid-Career, Senior Management and Employee Benefits
@ Under the Company Flex Plan, there are different levels of coverage from
which to elect
* Base salary plus Short Term Awards
**Interest rate established by AT&T Board and subject to change from
time to time.
Terms and Conditions of Employee Benefit, Mid-Career Benefit and
Executive Benefit Plans subject to change by the Company. The above
is only a very brief outline of such benefits. Any benefits or rights
will be determined by the specific plan provisions as they apply in
each case.
7/19/91
<PAGE>
Attachment D
MINIMUM PENSION SCHEDULE#
(Amounts Assume 50% Joint and Survivor Pension is declined)*
Retirement Age** Total Annual Pension***
55 $384,639
56 422,228
57 462,330
58 505,060
59 550,526
60 598,839
61 650,107
62 704,429
63 761,909
64 822,640
65 886,716
* If survivor annuity is elected, employee's minimum pension
amount will be reduced to reflect practices in effect upon
employee's termination and such reduction will assume that the
proportion of accrued qualified and non-qualified pensions
applies to amounts paid under this Minimum Pension Schedule.
** Pension amounts will be prorated to the nearest whole month.
*** Amounts paid under this Minimum Pension Schedule will be reduced
by the following offsets: (1) All AT&T's or subsidiary or
associated company's qualified and non-qualified pension plans
(e.g., AT&T Management Pension Plan, AT&T Non-Qualified Pension
Plan, AT&T Mid-Career Pension Plan, AT&T Senior Management Long-
Term Disability and Survivor Protection Plan), (2) any pensions
payable from former employers (e.g., Honeywell), and (3) 50% of
the Primary Social Security Maximum Benefit. If such offsets
exceed the Minimum Pension amount, no benefit under this
schedule is payable. Qualified and non qualified savings plans
are not offsets to the Minimum Pension Schedule, e.g., AT&T
Long-Term Savings Plan and AT&T Senior Management Incentive
Award Deferral Plan.
The Minimum Pension, all other AT&T non-qualified pensions and
benefits, as well as all short and long term incentives, are
subject to the AT&T Non-Competition Guideline (attached).
7/31/91
<PAGE>
Exhibit (12)
AT&T Form 10-K
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
(Unaudited)
For the Year Ended December 31,
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Earnings Before Income
Taxes $6,204 $5,958 $ 883 $4,879 $4,731
Less Interest Capitalized
During the Period 72 62 79 79 89
Less Undistributed
Earnings of Less Than
50% Owned Affiliates (16) 23 49 39 31
Add Fixed Charges 1,528 1,621 1,781 1,864 1,400
------ ------ ------ ------ ------
Total Earnings $7,676 $7,494 $2,536 $6,625 $6,011
====== ====== ====== ====== ======
Fixed Charges
Total Interest Expense
Including Capitalized
Interest $1,181 $1,247 $1,294 $1,267 $ 997
Interest Portion of
Rental Expenses 347 374 487 597 403
------ ------ ------ ------ ------
Total Fixed
Charges $1,528 $1,621 $1,781 $1,864 $1,400
====== ====== ====== ====== ======
Ratio of Earnings to
Fixed Charges 5.0 4.6 1.4 3.6 4.3
====== ====== ====== ====== ======
<PAGE> 1 Exhibit (13)
AT&T Form 10-K
OUR GROWTH COMES FROM COMPETING SUCCESSFULLY WORLDWIDE IN BOTH
OLD AND NEW MARKETS, OFFERING NEW TECHNOLOGY AND HIGH-QUALITY
PRODUCTS AND SERVICES.
FINANCIAL SECTION
A DISCUSSION AND ANALYSIS OF OUR RESULTS AND OPERATIONS..........
Global economic conditions improved in 1993, but growth was still
sluggish. In Europe and Japan the weak conditions of 1991 and
1992 continued this past year. Against this backdrop, we reported
a 3.5% increase in total revenues in 1993, a pickup from the 2.9%
increase in 1992.
We made three accounting changes this past year. Because new
rules apply to all U.S. companies, we changed our accounting for
retiree benefits, postemployment benefits and income taxes. The
net after-tax charge to bring our financial statements in line
with the new accounting methods caused us to report a net loss
for the year. Excluding that net charge and the increase in 1993
expenses caused by the change in accounting for postemployment
benefits and a fourth-quarter restructuring charge, our per share
earnings were $3.15 in 1993. These accounting changes do not
affect cash flows; they only change the expenses we report.
CONSOLIDATED INCOME STATEMENT INFORMATION
Dollars in millions 1993 1992 1991
- -----------------------------------------------------------------
Total revenues $67,156 $64,904 $63,089
Total costs 40,569 39,710 38,825
_________________________________________________________________
Gross margin 26,587 25,194 24,264
Provisions for business
restructuring 498 64 3,572
Other operating expenses 19,851 18,861 19,334
_________________________________________________________________
Operating income $ 6,238 $ 6,269 $ 1,358
=================================================================
Income before cumulative effects
of accounting changes $ 3,974 $ 3,807 $ 522
Cumulative effects of
accounting changes (7,768) - -
_________________________________________________________________
Net Income (Loss) $(3,794) $ 3,807 $ 522
=================================================================
Gross margin percentage 39.6% 38.8% 38.5%
Operating margin percentage 9.3% 9.7% 2.2%
=================================================================
-21-(Cont'd)<PAGE>
<PAGE> 2
In our new accounting for retiree benefits, we estimate and
book expenses for retiree benefits during the years employees are
working and accumulating these future benefits. When we used the
former "pay-as-you-go" accounting, we simply booked our
contributions to trust funds for life insurance benefits and the
actual claims for benefits such as health care and telephone
concessions as they occurred. To use the new method, we made
assumptions about trends in health care costs, interest rates and
average life expectancy. Then we estimated the future payments
for benefits to all present retirees and for accumulated benefits
of active employees. We then placed this $11.3 billion liability
on the books to reflect those estimated future obligations at
January 1, 1993, expressed in today's dollars. From now on, we
will continue to record the expenses as employees accumulate
future benefits so that our liability for retiree benefits is
always up to date. We expect our annual expenses to be at about
the same level we recorded before this accounting change.
*****************************************************************
WHY DO WE MAKE ACCOUNTING CHANGES?
The goal of financial reporting and our objective at AT&T is to
give investors the information they need to understand how we're
doing over time and in comparison with other companies. Sometimes
accounting rule-makers issue new rules for all companies. At
other times, we decide to change our methods because of trends in
our business or industry.
HOW DO WE MAKE THE CHANGES?
We first figure out what our balance sheet would look like if we
had always used the new accounting methods. Then we make all the
adjustments needed to catch up with those new methods. Our income
statement shows the net impact of all those adjustments as
"cumulative effects on prior years of changes in accounting."
WHAT DO THE CHANGES MEAN TO RESULTS?
Accounting changes sometimes have a large effect on reported
earnings in the year of a change, but the effects on future
earnings may be quite small once we bring the balance sheet up to
date. Because the cumulative effects come from earlier years,
many investors set them aside when looking at current results.
The income statement format allows investors to see our results
easily with or without these cumulative effects of accounting
changes.
*****************************************************************
-21-<PAGE>
<PAGE> 3
*****************************************************************
<TABLE>
<CAPTION>
AT&T VERSUS S&P 500
TOTAL SHAREHOLDER RETURNS ASSUMING REINVESTMENT OF DIVIDENDS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
In Dollars
600
*
500
*
#
400 * #
* * #
*# #
300 * *#
#
* # #
# *
200 *# * *# *#
*# *# #
* *
* # #
100 *# *# #
0
--------------------------------------------------------------------
1/84 84 85 86 87 88 89 90 91 92 93
<FN>
* AT&T
# S&P
Your investment has outperformed the S&P 500 for the past decade.
Assumes $100 invested in the new AT&T Common Stock and in the S&P 500 Index
on January 1, 1984 and all dividends reinvested.
</TABLE>
*****************************************************************
Our new accounting for postemployment benefits, including
payments for separations and disabilities, is very similar to our
new accounting for retiree benefits. We must book expenses for
future separations during the years employees are working and
accumulating service with the company, and for disability
benefits when the disabilities occur. Using the former method, we
booked expenses for separations when we identified them and
expenses for disabilities when we made payments. We used our
experience over the past five years to estimate future
separations. In the future, we will adjust our estimates based on
the number of employees who actually leave our payroll with these
payments. Because we book expenses every quarter using this
accounting method instead of booking expenses when we make plans
to restructure our business, this change increased our costs and
expenses by $301 million in 1993, and reduced our earnings by
$171 million, or $0.13 per share. We expect our earnings in 1994
to be similarly reduced.
-22-(Cont'd)<PAGE>
<PAGE> 4
Our new accounting for income taxes uses the enacted tax
rates to compute both deferred and current taxes. That means we
must refigure our deferred tax assets and liabilities whenever
Congress changes tax rates. Using our former method, we held
deferred tax assets and liabilities at their original values even
when tax rates changed. Because federal corporate tax rates are
lower now than they were before the 1986 Tax Act, we had a gain
when we changed to the new accounting method. Apart from the
effects of changes in statutory tax rates, we do not expect the
new accounting to affect future earnings materially.
AN OVERVIEW OF OUR BUSINESS OPERATIONS
Our core business is to meet the communications and computing
needs of our customers by using networks to move and manage
information. We divide the revenues and costs of this core
business into three categories on our income statement:
telecommunications services, products and systems, and rentals
and other services. AT&T Capital Corporation (AT&T Capital) and
AT&T Universal Card Services Corp. (Universal Card) are partners
with our core business units as well as innovators in the
financial services industry. We include their revenues and costs
in a separate category on our income statement: financial
services and leasing.
Customer demand for the products and services of our core
business continues to grow despite weak economic conditions
worldwide. Technological advances and brisk competition are
making electronic communications and computing ever more useful
and economical. Our financial services businesses are also
growing because we are investing in new assets.
We look forward to greater revenue growth in 1994 than in
1993 because of a strengthening economy and the expected
completion of our merger with the fast-growing McCaw Cellular
Communications, Inc. (McCaw).
*****************************************************************
OUR MERGER WITH MCCAW AIMS TO GIVE OUR CUSTOMERS A MORE
COMPREHENSIVE SERVICE OFFERING AND OUR INVESTORS FASTER GROWTH
AND HIGHER LONG-TERM RETURNS ON THEIR INVESTMENT.
Our plan is for McCaw's owners to exchange their McCaw stock for
new AT&T stock. Then all owners of the post-merger AT&T will
share in the benefits and risks of the combined operations. The
people, assets and capital of the two firms won't change just
because of this merger.
In mergers like this, we simply add up the earnings, assets,
liabilities and equity of the two companies and become one
company. We used this same method, called a "pooling of
interests," for the merger of AT&T and NCR in 1991.
After a merger, financial statements and all other financial
information show the combined amounts as if there had always been
only one company. To help you picture this, we included some of
these combined amounts at the bottom of the ten-year summary of
selected financial data. We computed these amounts assuming the
merger was already completed using a one-for-one exchange of
shares as AT&T and McCaw proposed in the merger agreement.
*****************************************************************
-22-<PAGE>
<PAGE> 5
<TABLE>
<CAPTION>
TEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA
(UNAUDITED)
Dollars in millions (except per share amounts)
Jan. 1,
1993* 1992 1991* 1990 1989 1988* 1987 1986* 1985 1984 1984
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Total revenues $67,156 $64,904 $63,089 $62,191 $61,100 $61,756 $60,530 $61,906 $63,130 $60,318
Research and
development expenses 3,069 2,911 3,114 2,935 3,098 2,988 2,810 2,599 2,527 2,477
Operating income (loss) 6,238 6,269 1,358 5,496 5,024 (2,275) 4,281 999 3,569 2,824
Income before cumulative
effects of accounting
changes 3,974 3,807 522 3,104 3,109 (1,230) 2,463 651 1,872 1,713
Net income (loss) (3,794) 3,807 522 3,104 3,109 (1,230) 2,463 476 1,872 1,713
Earnings (loss) per
common share before
cumulative effects of
accounting changes 2.94 2.86 0.40 2.42 2.40 (0.94) 1.82 0.42 1.31 1.23
Earnings (loss) per
common share (2.80) 2.86 0.40 2.42 2.40 (0.94) 1.82 0.29 1.31 1.23
Dividends declared per
common share 1.32 1.32 1.32 1.32 1.20 1.20 1.20 1.20 1.20 1.20
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS AND CAPITAL
Property, plant and
equipment - net $19,397 $19,358 $18,689 $18,661 $17,023 $16,394 $21,866 $22,061 $23,133 $22,167 $21,416
Total assets 60,766 57,188 53,355 48,322 42,187 39,869 44,014 43,617 44,683 43,418 39,156
Long-term debt including
capital leases 6,812 8,604 8,484 9,354 8,377 8,350 8,027 7,789 8,026 8,943 9,462
Common shareowners'
equity 13,850 18,921 16,228 15,883 14,723 13,705 16,617 15,946 16,951 15,839 14,413
Net capital expenditures 3,701 3,933 3,860 4,018 3,951 4,288 3,805 3,904 4,295 3,685
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-23-(Cont'd)<PAGE>
<PAGE> 6
<TABLE>
<CAPTION>
TEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA (Cont'd)
(UNAUDITED)
Dollars in millions (except per share amounts)
Jan. 1,
1993* 1992 1991* 1990 1989 1988* 1987 1986* 1985 1984 1984
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER INFORMATION
Operating income (loss)
as a percentage of
revenues 9.3% 9.7% 2.2% 8.8% 8.2% (3.7)% 7.1% 1.6% 5.7% 4.7%
Net income (loss) as a
percentage of revenues (5.6)% 5.9% 0.8% 5.0% 5.1% (2.0)% 4.1% 0.8% 3.0% 2.8%
Return on average common
equity (29.0)% 21.1% 3.1% 19.7% 21.8% (7.2)% 15.0% 2.2% 10.7% 10.5%
Data at year-end except
last column:
Stock price per share $52.50 $51.00 $39.125 $30.125 $45.50 $28.75 $27.00 $25.00 $25.00 $19.50 $17.875
Book value per common
share $10.24 $14.12 $12.39 $12.46 $11.54 $10.55 $12.66 $11.91 $12.58 $12.00 $11.39
Debt ratio 56.1% 46.1% 48.9% 47.6% 43.0% 41.6% 36.1% 34.4% 34.5% 36.5% 40.1%
Debt ratio excluding
financial services 28.3% 25.4% 34.7% 38.3% 36.3% 37.3% 32.5% 32.2% 32.9% 36.2% 40.1%
Employees 308,700 312,700 317,100 328,900 339,500 364,700 365,000 378,900 399,600 427,200 435,000
- ------------------------------------------------------------------------------------------------------------------------------
PROFORMA INFORMATION REFLECTING THE PROSPECTIVE MERGER OF AT&T AND MCCAW
Total revenues $69,351 $66,647 $64,455 $63,228 $61,604 $62,067 $60,726 $61,975 $63,159 $60,326
Total costs and expenses 62,853 60,119 62,981 57,684 56,720 64,496 56,585 61,000 59,689 57,501
Net income (loss) (5,906) 3,442 171 3,666 2,820 (1,527) 2,374 434 1,856 1,712
Earnings (loss) per
common share (3.83) 2.27 0.12 2.50 1.96 (1.07) 1.64 0.30 1.29 1.22
Total assets 69,392 66,104 62,072 57,036 45,228 41,945 45,583 44,305 44,824 43,461
Total long-term debt 11,802 14,166 13,683 14,579 10,116 10,172 9,060 8,234 8,104 8,963
Common shareowners' equity 13,373 20,312 17,972 17,928 15,727 13,694 16,913 15,849 16,945 15,852
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
* 1993 data reflect a $7.8 billion net charge for three accounting changes.
1991 data reflect $4.5 billion of business restructuring and other charges.
1988 data reflect a $6.7 billion charge due to accelerated digitization of the long distance network.
1986 data reflect $3.2 billion of charges for business restructuring, an accounting change and other items.
</TABLE>
-23-<PAGE>
<PAGE> 7
CHANGES IN OUR COMPETITIVE LANDSCAPE
*****************************************************************
MULTIMEDIA NETWORKS WILL LEAD TO NEW WAYS OF COMMUNICATING AND
COMPUTING AND NEW FORMS OF EDUCATION AND ENTERTAINMENT.
Telephone and cable television firms are forming alliances to speed
their delivery of multimedia services to the home. A notable
example is the proposed merger of Bell Atlantic Corp. and Tele-
Communications Inc. Focusing on the programming to be provided by
these networks, QVC Network Inc. and Viacom Inc. were competing to
acquire Paramount Communications Inc., the entertainment company,
at year-end.
Several firms are announcing major new networks. Pacific
Bell's planned $16 billion network is a good example. AT&T, as a
supplier of network systems and services and a provider of
multimedia products and services, will be a supplier as well as a
customer and competitor of these firms.
The new alliances and networks, increasing competition, and
changes in technology and regulation are all leading to more
choices for customers. These trends should also lower our costs to
reach customers over local networks. Success in this new multimedia
environment will depend on innovation and giving customers value
for their purchases.
COMPETITION IS GLOBAL AND INCREASINGLY BETWEEN MULTINATIONAL FIRMS
WITH PARTNERS FROM DIFFERENT NATIONS.
To offer one-stop shopping for telecommunications services to
companies that do business globally, we formed WorldPartners with
Kokusai Denshin Denwa Co. Ltd. of Japan and Singapore Telephone. We
intend to also find European partners or build networks there
ourselves, spending as much as $350 million. British Telecom Plc
and MCI Communications Corp.(MCI) also formed an alliance, as did
Germany's Deutsche Bundespost Telekom and France Telecom.
British Telecom applied to the FCC to provide long distance
service in the U.S. We applied to provide service in the U.K. and
also asked the FCC to prevent non-U.S. carriers from operating in
the U.S. unless we can compete in their home markets.
We extended our rivalry with MCI to Canada through an alliance
with Unitel Communications, Inc. MCI is allied with the Stentor
consortium there. Mexico will open long distance services to
competition from U.S. carriers in 1996 as part of the North
American Free Trade Agreement (NAFTA). NAFTA should also aid our
sales of network systems to Mexico.
In 1993 we signed an important agreement with the People's
Republic of China, where we will compete with Canada's Northern
Telecom Ltd., France's Alcatel Alsthom S.A., Sweden's Telefon AB
L.M. Ericsson and possibly others. This past year we also won our
first contract to supply switching equipment to Japan, a market
that is dominated by Fujitsu Ltd. and NEC Corp.
*****************************************************************
-24-(Cont'd)<PAGE>
<PAGE> 8
Cost controls, coupled with our revenue growth, caused our
gross margin percentage to improve the past two years. Operating
expenses grew 7.5% in 1993, mainly because of marketing and sales
efforts for telecommunications services and provisions for
business restructuring. Such marketing and sales expenses also
rose in 1992, but total operating expenses declined because of
restructuring and other charges in 1991.
To increase our presence outside the U.S., we are hiring
employees, building plants and forming joint ventures. However,
during the past two years the economies of Europe and Japan were
very weak and we needed to restructure some of our overseas
operations. For these reasons we reported an operating loss in
our operations outside the U.S. both years. Nevertheless, we
continue to believe that these operations and markets provide
excellent opportunities for future growth in revenues and
earnings.
All our business units face stiff competition. Prices and
technology are under continual pressure. Such market conditions,
along with a slow-growing economy, make the ongoing need for
active cost controls even more urgent. Managers must continuously
assess their resource needs and consider further steps to reduce
costs. Sometimes these steps will include consolidating
facilities, disposing of assets, reducing work force or
withdrawing from markets.
Like other manufacturers, we use, dispose of and clean up
substances that are regulated under environmental protection
laws. We also have been named a potentially responsible party
(PRP) at a number of Superfund sites. At most of these sites, our
share is very limited and there are other PRPs who can be
expected to contribute to the cleanup costs. We review potential
cleanup costs and costs of compliance with environmental laws and
regulations regularly. Using engineering estimates of total
cleanup costs, we estimate our potential liability for all
currently and previously owned properties where some cleanup may
be required, including each Superfund site where we are named a
PRP. We provide reserves for these potential costs and regularly
review the adequacy of our reserves. In addition, we forecast our
expenses and capital expenditures for existing and planned
compliance programs as part of our regular corporate planning
process. Despite these procedures, it is very difficult to
estimate the future impact of actions regarding environmental
matters, including potential liabilities to us. However, we
believe that cleanup costs and costs related to environmental
proceedings and ongoing compliance with present laws will not
have a material effect on our future expenditures, earnings or
competitive position beyond that provided for at year-end.
Many of our employees are represented by unions. In 1992
AT&T management and union bargainers negotiated innovative labor
agreements with provisions for employees' career security and
well-being as well as higher wages and increased employee
ownership of the business. Under the wage portion of the
agreements, employees at the top of each wage schedule received
increases of 4% in 1992 and 3.9% in 1993, and will receive an
increase of 3.9% in 1994. Pensions are increased by 13% for those
who retire after May 31, 1992. The agreements also retained
management flexibility to react to business conditions while
enhancing education, training and job-changing opportunities for
employees.
-24-<PAGE>
<PAGE> 9
TELECOMMUNICATIONS SERVICES......................................
These revenues grew 0.7% in 1993 and 2.0% in 1992, driven by
volume growth. Billed minutes for switched services rose 5.5% in
1993 and 6% in 1992, paced by business services. Volume growth
exceeds revenue growth as customers select more of the higher-
value, lower-priced services made possible by our greater
efficiency. This shift in the mix of services that customers
select lowers average per-minute revenues. In the latter half of
1993 we raised some of our prices and fees - about $500 million
on an annual basis. These increases were primarily for services
where customer demand is not very sensitive to price. In late
December we filed for 1994 price increases of $750 million on an
annual basis and also announced a new discount plan for high-
volume callers. We expect the effects on revenues of this
discount plan and those 1994 price increases to offset each
other. In January 1994 we also proposed to raise prices for some
business services by $165 million on an annual basis.
We expect improving economic conditions and higher prices to
cause our telecommunications services to grow faster in 1994 than
in 1993.
TELECOMMUNICATIONS SERVICES
Dollars in millions 1993 1992 1991
- -----------------------------------------------------------------
Total revenues $39,863 $39,580 $38,805
_________________________________________________________________
Costs
Access and other
interconnection costs 17,709 18,132 18,395
Other costs 7,009 7,135 6,881
_________________________________________________________________
Total costs 24,718 25,267 25,276
_________________________________________________________________
Gross margin $15,145 $14,313 $13,529
=================================================================
Gross margin percentage 38.0% 36.2% 34.9%
=================================================================
This past year we announced AT&T TrueVoice(#) service, a new,
patented technology to improve the sound quality on calls placed
within the continental U.S. and Canada. We expect to complete the
national rollout by April 1994 so that AT&T TrueVoice service
will operate automatically on every call placed on our network.
We believe it gives us a competitive advantage that will help us
attract and keep customers.
Markets for telecommunications services are extremely
competitive. AT&T is the market leader, but we saw another small
decline in our market share this past year. Our own data and the
data of the Federal Communications Commission (FCC) show that our
market share is about 60% of the minutes billed for inter-LATA
switched services. We withstood an important challenge to our
market position when the FCC allowed customers of inbound "800"
services to switch carriers without penalties for a 90-day period
in 1993. We retained 95% of our 531 largest customers and won
contracts away from our competitors. Many of these customers
signed long-term contracts, so we emerged from this "Fresh Look"
period with signed contracts having a greater dollar value than
those we had before.
(#) Registered Trademark
-25-(Cont'd)<PAGE>
<PAGE> 10
The FCC and state utility commissions regulate our services,
and many more rules are imposed on us than on our competitors.
Because of fierce competition and rapid changes in technology and
customer needs, the FCC adopted "price caps" in 1989, increasing
our flexibility to respond to those market conditions. Since
then, the FCC has removed all limits on our prices for many
business services. However, the FCC decided in June 1993 to
continue price caps for residential services instead of reducing
regulation of AT&T.
Total costs of telecommunications services declined this
past year; costs in 1992 were about level with those in 1991.
Despite higher calling volumes, access and other interconnection
costs dropped both years largely because of lower prices from
telephone companies to reach customers over local networks. The
1993 decrease in other costs was mainly due to lower
uncollectibles. We also had lower depreciation expense because we
reduced plant additions. The 1992 increase in other costs was
associated with higher service volumes. We also had higher
uncollectibles because of fraud and the weak economy.
PRODUCTS AND SYSTEMS.............................................
Despite a weak global economy and intense price competition, our
sales grew 8.0% in 1993 and 3.3% in 1992. Sales outside the U.S.
grew at a faster rate than U.S. sales and contributed more than
half the increase in both years. Based on our current
expectations for the global economy, we expect greater sales
growth in 1994.
PRODUCTS AND SYSTEMS
Dollars in millions 1993 1992 1991
- -----------------------------------------------------------------
Revenues
Telecommunications network
products and systems $ 8,345 $ 7,691 $ 7,490
Computer products and systems 3,597 3,433 3,667
Communications products
and systems 3,438 3,098 2,852
Microelectronics products,
special-design products for
U.S. government, and other* 2,418 2,251 1,932
_________________________________________________________________
Products and systems 17,798 16,473 15,941
_________________________________________________________________
Total costs 10,809 9,846 9,134
_________________________________________________________________
Gross margin $ 6,989 $ 6,627 $ 6,807
=================================================================
Gross margin percentage 39.3% 40.2% 42.7%
=================================================================
* "Other" is composed principally of media, predominantly for use
with automated teller machines and point-of-sale equipment, and
business forms.
-25-<PAGE>
<PAGE> 11
Revenues from sales of telecommunications network products
and systems grew 8.5% in 1993 and 2.7% in 1992. The 1993 increase
came chiefly from higher sales of wireless products, switching
equipment and operations systems. In 1992 the growth came mainly
from higher sales of cable systems and switching equipment. Sales
outside the U.S. rose both years while U.S. sales grew in 1993.
Orders were heavily weighted toward the 1991 start of a seven-
year, $600 million contract to supply GTE Corporation with
wireless equipment, so U.S. sales were lower in 1992.
Many countries are modernizing their communications
networks. This will lead to many sales opportunities in the years
ahead. We expect to partner with these countries because we
provide a full range of integrated products and services and,
sometimes, assistance in financing their equipment purchases.
In February 1993 we signed an agreement with the State
Planning Commission of the People's Republic of China. Under that
proposed partnership, we expect to engage in local research,
development and manufacturing of central office switching
equipment, cellular communications systems and telecommunications
networks for use in that country.
Sales to the regional Bell companies grew in 1993 after
staying about level in 1992. In 1993 Pacific Bell announced plans
to construct a broadband network over seven years. We were
selected as a critical supplier and systems integrator for the
project, and expect up to $5 billion in revenues from the
project. Other regional carriers also have plans to modernize
their networks. Because we provide the latest digital technology
and services, we expect to win some sizable contracts.
Revenues from sales of computer products and systems rose
4.8% in 1993 after falling 6.4% in 1992. The growth in 1993 came
mainly from higher U.S. sales of workstations, automated teller
machines, and mid-range and high-end systems for enterprise-wide
computing. The decline in 1992 was mainly due to the loss of
sales from some products that were phased out after the 1991
merger of AT&T and NCR Corporation (NCR). In both years we faced
fierce competitive pricing, particularly for lower-end computer
products, and weak economic and market conditions in Europe and
Japan. We recorded no revenues from UNIX System Laboratories,
Inc. (USL) in 1993 because we sold our ownership interest and
included USL's net results in other income-net. USL's revenues
from computer products were $74 million in 1992 and $71 million
in 1991.
Revenues from sales of communications products and systems
grew 11.0% in 1993 and 8.6% in 1992. About two-thirds of the
growth in 1993 came from higher sales of business communications
products and systems. We also had higher sales of consumer-
oriented products, submarine cables and data communications
equipment. The growth in revenues from consumer communications
products reflected higher sales of cellular products, corded
telephones, telephone answering devices and non-AT&T products
such as pagers and electronic games, which was partially offset
by lower sales of cordless telephones. The increase in sales of
consumer-oriented products was larger in 1992, driven by higher
sales of cordless telephones and telephone answering systems.
Sales of submarine cables, business communications systems and
data communications equipment also contributed to the growth in
revenues that year.
[GRAPHIC](See appendix for description)
-26-(Cont'd)<PAGE>
<PAGE> 12
In total, revenues from sales of microelectronics products,
special-design products for the federal government, and other
products and systems grew 7.4% in 1993 and 16.5% in 1992. Growth
in both years came mainly from higher sales of microelectronics
components and power systems to original equipment manufacturers
outside the U.S. Sales of media and business forms were steady in
1993 after rising in 1992. Because of reduced spending by the
U.S. federal government, sales of special-design products, such
as secure phones, declined both years.
Higher sales levels caused costs of products and systems to
increase both years. Pricing pressures and changes in our product
sales mix caused the gross margin percentage to decline.
RENTALS AND OTHER SERVICES.......................................
These revenues were about level the last three years. Higher
revenues from newer telecommunications services and maintenance
contracts for communications systems were offset by the
continuing and expected decline in rentals of communications
equipment. The fast-growing revenues from "other rentals and
services" come from many different services, such as network
management and satellite services, which generate small revenue
streams. We expect the principal trends in this revenue category
to continue in 1994.
RENTALS AND OTHER SERVICES
Dollars in millions 1993 1992 1991
- -----------------------------------------------------------------
Revenues
Computer products and systems $2,514 $2,667 $2,676
Communications products and
systems rentals 1,174 1,409 1,674
Communications products and
systems services 1,457 1,375 1,299
Other* 1,846 1,506 1,310
_________________________________________________________________
Rentals and other services 6,991 6,957 6,959
_________________________________________________________________
Total costs 3,331 3,287 3,344
_________________________________________________________________
Gross margin $3,660 $3,670 $3,615
=================================================================
Gross margin percentage 52.4% 52.8% 51.9%
=================================================================
* "Other" is composed principally of global messaging and
electronic mail services, telemarketing services, information
technology services and facility rentals.
Although the gross margin percentage improved since 1991 because
of a smaller work force, the continuing shift in revenue mix to
other services from higher-margin rentals led to a decline in the
margin percentage in 1993.
-26-<PAGE>
<PAGE> 13
*****************************************************************
DEBT TO EQUITY ANALYSIS
AT&T Consolidated and AT&T's Core Business
In Billions of Dollars
40
#D
30 #D #D #D
#D #D #D
#D @D #D @D #D
20 #D @D #E @D #D
#E @D #E @E #D @D
#E @E #E @E #E @D
10 #E @E #E @E #E @E
#E @E #E @E #E @E
#E @E #E @E #E @E
0 #E @E #E @E #E @E
1991 1992 1993
------------------------------------------------
D: Debt
E: Equity
#: AT&T including Financial Services and Leasing
@: AT&T's Core Business
Most of our debt is for Universal Card and AT&T Capital. Our
goal is a 30% debt ratio for our core business. The accounting
changes reduced our equity in 1993.
*****************************************************************
FINANCIAL SERVICES AND LEASING...................................
These revenues grew 32.2% in 1993 and 36.8% in 1992. Both
Universal Card and AT&T Capital contributed to the growth by
profitably expanding their portfolios of earning assets. We
expect continuing growth in these revenues, earnings and assets
in 1994.
FINANCIAL SERVICES AND LEASING
In millions 1993 1992 1991
- -----------------------------------------------------------------
Revenues
AT&T Capital $ 1,360 $ 1,266 $ 1,160
Universal Card 1,228 831 475
Eliminations, adjustments
and other* (84) (203) (251)
_________________________________________________________________
Total revenues $ 2,504 $ 1,894 $ 1,384
Total costs 1,711 1,310 1,071
_________________________________________________________________
Gross margin $ 793 $ 584 $ 313
=================================================================
Gross margin percentage 31.7% 30.8% 22.6%
Operating income (loss) $ 339 $ 193 $ (34)
Operating margin percentage 13.5% 10.2% (2.5)%
Assets $17,033 $14,003 $ 9,809
=================================================================
Universal Card Information:
Finance receivables $ 9,154 $ 6,606 $ 3,786
Accounts 11.7 10.3 7.6
=================================================================
* "Other" is composed principally of revenues from certain lease
finance assets AT&T retained when AT&T Capital was reorganized.
-27-(Cont'd)<PAGE>
<PAGE> 14
Universal Card is the second largest competitor in its
industry measured by customer accounts. Since its start in 1990
Universal Card pioneered a variety of innovative promotions to
add new accounts, many involving the transfer of balances from
other credit cards. But our credit approval and monitoring have
kept our percentage of delinquent balances and write-offs below
industry norms. Universal Card became profitable in 1992, well
ahead of our projection when we entered the business.
After an initial public offering of its common stock in
August 1993, AT&T Capital became the largest publicly owned
equipment leasing and financing company in the U.S. AT&T still
owns about 86% of its stock, so its results are still fully
consolidated in our financial statements. We unconditionally
guaranteed all of AT&T Capital's outstanding debt at the end of
March 1993, before its legal reorganization. Since then, all AT&T
Capital debt has been issued using its own credit. This change
makes it financially independent and permits us to focus on the
financing needs of our core business.
The growth in costs of financial services and leasing over
the last two years came from the higher volume of financing and
credit card transactions. The improved gross margin percentage
mainly reflects the maturation of the credit card receivables
portfolio. A lower cost of funds due to lower interest rates in
1993 also contributed to the improved margin percentage.
By 1995 we must change our accounting for the loans we make
to customers. Under the new rules we must consider delays or
reduced payments of interest as well as principal when we value
loans that may not be fully repaid. We do not expect this change
to affect our costs or expenses materially.
OPERATING EXPENSES...............................................
Selling, general and administrative expenses increased 5.2% in
1993, largely because of advertising and promotions, and sales
and sales support activities to protect our core business. Such
spending, and costs to expand outside the U.S. and into new
markets, will continue to grow. These expenses also rose in 1992,
but the increase was not evident because 1991 expenses included
$501 million in charges related to business restructuring
activities and the merger of AT&T and NCR.
Research and development expenses increased 5.4% in 1993,
but decreased 6.5% in 1992. The increase was mainly for work on
cellular technology, advanced communications services and
devices, and projects aimed at international growth. In 1992 we
streamlined development work on telecommunications network
systems and consolidated development activities for computer
systems following the merger of AT&T and NCR.
In 1993 AT&T Global Information Solutions (formerly NCR)
offered an early retirement program and a voluntary separation
program to its U.S.-based employees. That unit expects to reduce
its work force by about 15%, or 7,500 employees, in 1994. About
2,200 employees accepted the early retirement offer. Employees
accepting the voluntary separation package must respond before
February 1994.
-27-<PAGE>
<PAGE> 15
Our 1993 provisions for business restructuring cover special
benefits provided to employees accepting early retirement offers
as well as other costs of closing facilities and relocating
employees. In addition to the changes at AT&T Global Information
Solutions, we are re-engineering and centralizing support
services for telecommunications services. These ongoing efforts
to raise productivity are part our commitment to meet the
challenge of intense competition.
Our 1991 provisions for business restructuring were
primarily for costs to make changes in our computer and business
equipment operations and in our use of leased and owned space.
The changes in our computer operations were initiated because of
the merger of AT&T and NCR.
OTHER INCOME STATEMENT ITEMS.....................................
Other income-net depends mostly on our cash balance and the
results and changes in our investments and joint ventures. Over
the last two years we reduced our balance of cash and temporary
cash investments because we have easy access to financing when we
need it. Our interest income declined over the past two years
because we had less cash on hand and interest rates were lower.
Income from our equity investments, coupled with our sharing of
earnings from AT&T subsidiaries that are partly owned by other
companies, declined in 1993 after increasing in 1992.
Miscellaneous pretax gains and losses caused the largest
shifts in other income-net over the three years:
-In 1993 we had a $217 million gain when we exchanged our
remaining 77% interest in UNIX System Laboratories, Inc.
(USL) for about 3% ownership of Novell, Inc., a leading
software development company.
-We sold our remaining interest in Compagnie Industriali
Riunite S.p.A. (CIR) in 1993 for a slight gain. Because of
declines in its market value, we wrote down that investment
by $68 million in 1992 and by $218 million in 1991. CIR's
value had declined along with the Italian securities market
and because of lower earnings from its principal holding,
Ing. C. Olivetti & C., S.p.A.
-In 1991 we had a $171 million gain from selling our
investment in Sun Microsystems, Inc.
Sales of stock by our subsidiaries produced a $9 million
loss in 1993 and a $43 million gain in 1991. The 1993 loss came
from deducting recourse loans made to AT&T Capital's senior
management so they would purchase shares and take a larger
personal stake in the success of the business following the
initial public offering. When the loans are repaid in seven
years, we expect to report a net $6 million gain on this
offering. The $43 million gain in 1991 came from USL selling
stock to other companies to encourage their support for open
computing standards.
Interest expense declined over the past two years because of
benefits from refinancing long-term debt at favorable rates and
reduced requirements for contingent liabilities. The benefits of
refinancing, which were partly offset by costs of that
refinancing such as call premiums, were responsible for about
half of the decline in 1993 and two-thirds of the decline in
1992.
-28-(Cont'd)<PAGE>
<PAGE> 16
INCOME TAXES INFORMATION
Dollars in millions 1993 1992 1991
- -----------------------------------------------------------------
Income before income taxes and
cumulative effects of
accounting changes $6,204 $5,958 $ 883
Provision for income taxes* 2,230 2,151 361
=================================================================
Effective income tax rate 36.0% 36.1% 40.9%
Income taxes paid $1,675 $ 697 $1,308
=================================================================
* The cumulative effects of accounting changes include the tax
effects of those adjustments.
The provisions for income taxes increased the past two years
mainly because of higher "book income," that is, the income
before income taxes and cumulative effects of accounting changes.
The effective tax rate was at about the same level in 1993 and
1992. The rate was much higher in 1991 because the tax effects of
restructuring charges were magnified by the lower income before
income taxes.
Congress increased the federal statutory tax rate to 35% in
August 1993 and made the change retroactive to January 1, 1993.
We recognized a $73 million benefit from adjusting our deferred
tax assets for the new rate. But that benefit was mostly offset
by the increase in taxes on 1993 taxable income, caused by the
higher rate. Consequently, this change in rates did not affect
our 1993 net income materially.
TOTAL ASSETS, WORKING CAPITAL AND LIQUIDITY......................
Net working capital - current assets less current liabilities -
is a measure of our ability to cover short-term liabilities with
assets that we expect to convert to cash soon. For example,
collecting receivables helps us to pay our suppliers. We reduced
our cash balance and working capital in 1993 to lower our
"opportunity" costs of maintaining that capital. Our financial
condition gives us easy access to financing when we need it, so
we now target a cash balance under $800 million.
BALANCE SHEET INFORMATION
Dollars in millions 1993 1992 Change
- -----------------------------------------------------------------
Working capital $ 4,404 $ 5,128 $ (724)
Cash and temporary cash investments 532 1,310 (778)
Total assets 60,766 57,188 3,578
Total debt 17,716 16,204 1,512
Total shareowners' equity 13,850 18,921 (5,071)
=================================================================
Days sales outstanding for
core business 59.5 63.2 (3.7)
Inventory turnover 3.4 3.2 0.2
=================================================================
-28-(Cont'd)<PAGE>
<PAGE> 17
The growth in accounts receivable comes from our higher
sales levels. Days sales outstanding in our core business,
defined as average accounts receivable divided by average daily
revenues in our core business, declined because of improved
receivables management. To spur further growth in revenues and
earnings for financial services and leasing, we invested in
additional finance receivables from our credit card and equipment
financing and leasing businesses. We keep a close watch on
account status, which has helped us maintain a low level of
delinquent balances and write-offs.
Higher inventory levels are associated with our sales
growth, which we expect to continue in 1994. Improved inventory
management in 1993 led to increased inventory turnover.
Making better use of existing capacity on our long distance
network, we reduced capital expenditures in 1993. Our plant
additions were at about the same level as depreciation, leaving
property, plant and equipment, net of accumulated depreciation,
essentially unchanged.
The fair value of our pension plan assets is greater than
our projected pension obligations. Those plan assets are earning
a return that exceeds the growth in pension liabilities. In
addition, we are amortizing a transition asset related to our
1986 change in pension accounting over 15.9 years, which produces
about $500 million of income each year. Consequently, we had
pension income that added to our prepaid pension costs.
Under an agreement with unions representing many of our
employees, we transferred some of these excess pension assets
over the past two years to fund retiree health care benefits.
Before 1993, we included these prepaid health care costs in other
assets. However, when we added the liabilities for retiree
benefits to our balance sheet in 1993, because of the new
accounting rule, we netted these prepaid costs with the
liabilities. We did something similar when we netted the trusts
for disability payments with liabilities for separations and
disabilities. Our net liabilities for postretirement and
postemployment liabilities are now combined on our balance sheet.
Our recognition of these liabilities created additional deferred
tax assets.
The increase in investments mainly reflects a $400 million
purchase of McCaw stock in February 1993. We also acquired
shares in Novell, Inc. and Unitel Communications, Inc. (Unitel).
In 1994 we must change the way we report and account for
investments in equity securities that have readily determinable
fair values and all debt securities. We do not expect this change
to have a material effect on our earnings or financial position.
Accounts payable are lower because of reduced access and
other interconnection costs. Payroll and benefit-related
liabilities are higher mainly due to increases in the associated
expenses and benefit costs. Other current liabilities declined
because some restructuring reserves were reclassified to
postemployment liabilities (because of our accounting change) and
others were used for restructuring.
-28-<PAGE>
<PAGE> 18
Higher debt maturing within one year chiefly reflects
commercial paper we issued to support financial services. Lower
long-term debt, including capital leases, was the net result of
our refinancing and redemption activities. Our recognition of
predivestiture retirees' benefits led to higher other
liabilities.
Minority interests, which represent other companies'
ownership interests in our net assets, increased mainly because
of the sale of 14% ownership in AT&T Capital in August 1993.
Despite the increase in income before cumulative effects of
accounting changes, operating cash flows declined in 1993 after
growing the year before. The decline was mainly due to higher
inventories and accounts receivable. The greater cash flow in
1992 reflected a smaller increase in working capital requirements
and higher earnings compared with 1991.
For the three years operating cash flows covered our net
capital expenditures and dividend payments. We expect such cash
flows to continue covering capital expenditures and dividends in
1994.
INVESTING ACTIVITIES.............................................
Net capital expenditures were $3.7 billion in 1993, compared with
$3.9 billion the two previous years. Most of our capital
expenditures are for the AT&T Worldwide Intelligent Network. In
1993 we reduced capital expenditures for the network because
technological advances permit us to use existing capacity more
efficiently. Net expenditures for the network, at market price,
were $2.2 billion in 1993, compared with $3.0 billion in 1992 and
$2.5 billion in 1991. These additions provide for growth,
modernization and enhanced reliability. Other capital
expenditures are for equipment and facilities used in leasing
operations, manufacturing, and research and development. We
expect our net capital expenditures for the network and in total
to remain at about the same level in 1994.
We are also investing in finance receivables, particularly
credit card receivables, to increase revenues and earnings from
our financial services businesses. These capital requirements
will continue growing in 1994.
In 1993 we made a $400 million investment in McCaw and
reached a definitive agreement on a merger. Our alliance will
undertake joint projects and marketing efforts. We also acquired
a 20% equity interest in Unitel for cash and advanced
telecommunications equipment valued at approximately $120
million.
In 1991 equity investments were a net source of cash because
we had net proceeds of $687 million from selling our shares in
Sun Microsystems, Inc.
[GRAPHIC] (See appendix for description)
We have a 49% interest in a joint venture with GTE, called
AG Communications Systems Corporation, which is developing new
technology and capabilities for GTE's digital switching systems.
By agreement, our ownership will increase to 80% in 1994 and to
100% in 2004. When we raise our ownership in 1994, we will fully
consolidate this venture in our financial statements.
-29-(Cont'd)<PAGE>
<PAGE> 19
FINANCING ACTIVITIES AND CAPITALIZATION..........................
The growth of our financial services and leasing business over
the past three years was the primary reason for the increase in
total debt outstanding and for most of our financing needs. We
expect increasing capital requirements for financial services in
1994.
Over the past three years we took advantage of favorable
levels of interest rates to extend debt maturities by refinancing
a substantial amount of long-term debt. Much of the financing
activity shown on our statements of cash flows relates to these
refinancing activities.
The ratio of total debt to total capital (total debt plus
total equity) increased to 56.1% at December 31, 1993, compared
with 46.1% at December 31, 1992, primarily because of the effects
on equity of adopting accounting changes. Excluding financial
services and leasing operations, the debt ratio increased to
28.3% at December 31, 1993, compared with 25.4% at December 31,
1992.
For the past three years we have issued new shares of common
stock in our shareowner and employee plans. In connection with
the merger in 1991, NCR sold 6.3 million shares of common stock
held as Treasury stock (approximately 17.9 million shares of AT&T
common stock after conversion). The proceeds from all newly
issued shares were used for general corporate purposes. The
dilution in earnings per share from new issuances was not
material.
We sell equity interests in AT&T subsidiaries only when
opportunities or circumstances warrant. We have no present plans
to sell material interests in subsidiaries.
Excluding the cumulative effects of the 1993 accounting
changes, return on equity was 19.2%, compared with 21.1% in 1992.
-29-<PAGE>
<PAGE> 20
REPORT OF MANAGEMENT ........................................
Management is responsible for the preparation, integrity and
objectivity of the financial statements and all other financial
information included in this report. Management is also
responsible for maintaining a system of internal controls as a
fundamental requirement for the operational and financial
integrity of results.
The financial statements, which reflect the consolidated
accounts of AT&T and subsidiaries, and other financial
information shown were prepared in conformity with generally
accepted accounting principles. Estimates included in the
financial statements were based on judgments of qualified
personnel.
To maintain its system of internal controls, management
carefully selects key personnel and establishes the
organizational structure to provide an appropriate division of
responsibility. We believe it is essential to conduct business
affairs in accordance with the highest ethical standards as set
forth in the AT&T Code of Conduct. These guidelines and other
informational programs are designed and used to ensure that
policies, standards and managerial authorities are understood
throughout the organization. Our internal auditors monitor
compliance with the system of internal controls by means of an
annual plan of internal audits. On an ongoing basis, the system
of internal controls is reviewed, evaluated and revised as
necessary in light of the results of constant management
oversight, internal and independent audits, changes in AT&T's
business and other conditions.
Management believes that the system of internal controls,
taken as a whole, provides reasonable assurance that (1)
financial records are adequate and can be relied upon to permit
the preparation of financial statements in conformity with
generally accepted accounting principles, and (2) access to
assets occurs only in accordance with management's
authorizations.
The Audit Committee of the Board of Directors, which is
composed of directors who are not employees, meets periodically
with management, the internal auditors and the independent
auditors to review the manner in which these groups of
individuals are performing their responsibilities and to carry
out the Audit Committee's oversight role with respect to
auditing, internal controls and financial reporting matters.
Periodically, both the internal auditors and the independent
auditors meet privately with the Audit Committee. These auditors
also have access to the Audit Committee and its individual
members at any time.
The financial statements in this annual report have been
audited by Coopers & Lybrand, Independent Auditors. Their audits
were conducted in accordance with generally accepted auditing
standards and include consideration of the internal control
structure and selective tests of transactions. Their report
follows.
Richard W. Miller Robert E. Allen
Executive Vice President, Chairman of the Board,
Chief Financial Officer Chief Executive Officer
-30-(Cont'd)<PAGE>
<PAGE> 21
REPORT OF INDEPENDENT AUDITORS ..................................
To the Shareowners of American Telephone and Telegraph Company:
We have audited the consolidated balance sheets of American
Telephone and Telegraph Company (AT&T) and subsidiaries at
December 31, 1993 and 1992, and the related consolidated
statements of income and cash flows for the years ended December
31, 1993, 1992 and 1991. These financial statements are the
responsibility of AT&T's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of AT&T and subsidiaries at December 31, 1993
and 1992, and the consolidated results of their operations and
their cash flows for the years ended December 31, 1993, 1992 and
1991, in conformity with generally accepted accounting
principles.
As discussed in Note 2 to the financial statements, in 1993
AT&T changed its methods of accounting for postretirement
benefits, postemployment benefits and income taxes.
Coopers & Lybrand
1301 Avenue of the Americas
New York, New York
January 27, 1994
-30-<PAGE>
<PAGE> 22
CONSOLIDATED AT&T AND SUBSIDIARIES
STATEMENTS OF INCOME Years ended December 31
Dollars in millions (except per share amounts) 1993 1992 1991
==========================================================================
SALES AND REVENUES
Telecommunications services $39,863 $39,580 $38,805
Products and systems 17,798 16,473 15,941
Rentals and other services 6,991 6,957 6,959
Financial services and leasing 2,504 1,894 1,384
__________________________________________________________________________
TOTAL REVENUES 67,156 64,904 63,089
__________________________________________________________________________
COSTS
Telecommunications services
Access and other interconnection costs 17,709 18,132 18,395
Other costs 7,009 7,135 6,881
__________________________________________________________________________
Total telecommunications services 24,718 25,267 25,276
Products and systems 10,809 9,846 9,134
Rentals and other services 3,331 3,287 3,344
Financial services and leasing 1,711 1,310 1,071
__________________________________________________________________________
TOTAL COSTS 40,569 39,710 38,825
__________________________________________________________________________
GROSS MARGIN 26,587 25,194 24,264
__________________________________________________________________________
OPERATING EXPENSES
Selling, general and administrative expenses 16,782 15,950 16,220
Research and development expenses 3,069 2,911 3,114
Provisions for business restructuring 498 64 3,572
__________________________________________________________________________
TOTAL OPERATING EXPENSES 20,349 18,925 22,906
__________________________________________________________________________
OPERATING INCOME 6,238 6,269 1,358
Other income-net 541 352 208
Gain (loss) on sale of stock by subsidiaries (9) - 43
Interest expense 566 663 726
__________________________________________________________________________
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECTS OF ACCOUNTING CHANGES 6,204 5,958 883
Provision for income taxes 2,230 2,151 361
__________________________________________________________________________
Income before cumulative
effects of accounting changes 3,974 3,807 522
__________________________________________________________________________
Cumulative effects on prior years
of changes in accounting for:
Postretirement benefits (net of income
tax benefit of $4,294) (7,023) - -
Postemployment benefits (net of income
tax benefit of $681) (1,128) - -
Income taxes 383 - -
__________________________________________________________________________
Cumulative effects of accounting changes (7,768) - -
__________________________________________________________________________
NET INCOME (LOSS) $(3,794) $ 3,807 $ 522
==========================================================================
Weighted average common
shares outstanding (millions) 1,353 1,332 1,293
PER COMMON SHARE:
Income before cumulative effects
of accounting changes $ 2.94 $ 2.86 $ .40
Cumulative effects of accounting changes (5.74) - -
__________________________________________________________________________
NET INCOME (LOSS) $(2.80) $ 2.86 $ .40
==========================================================================
The notes on pages 34 through 43 are an integral part of the consolidated
financial statements. *(Page numbers refer to the Company's Annual Report
to security holders.)
-31-<PAGE>
<PAGE> 23
CONSOLIDATED AT&T AND SUBSIDIARIES
BALANCE SHEETS at December 31
Dollars in millions (except per share amount) 1993 1992
==========================================================================
ASSETS
Cash and temporary cash investments $ 532 $ 1,310
Receivables, less allowances of $1,003 and $829
Accounts receivable 11,933 11,040
Finance receivables 11,370 8,569
Inventories 3,187 2,659
Deferred income taxes 2,079 2,118
Other current assets 637 818
__________________________________________________________________________
TOTAL CURRENT ASSETS 29,738 26,514
__________________________________________________________________________
Property, plant and equipment-net 19,397 19,358
Investments 1,503 864
Finance receivables 3,815 3,643
Prepaid pension costs 3,576 3,480
Other assets 2,737 3,329
__________________________________________________________________________
TOTAL ASSETS $60,766 $57,188
==========================================================================
LIABILITIES AND DEFERRED CREDITS
Accounts payable $ 4,694 $ 5,045
Payroll and benefit-related liabilities 3,746 3,336
Postretirement and postemployment
benefit liabilities 1,301 -
Debt maturing within one year 10,904 7,600
Dividends payable 448 443
Other current liabilities 4,241 4,962
__________________________________________________________________________
TOTAL CURRENT LIABILITIES 25,334 21,386
__________________________________________________________________________
Long-term debt including capital leases 6,812 8,604
Postretirement and postemployment
benefit liabilities 9,082 -
Other liabilities 4,298 2,634
Deferred income taxes 275 4,660
Unamortized investment tax credits 270 350
Other deferred credits 263 181
__________________________________________________________________________
TOTAL LIABILITIES AND DEFERRED CREDITS 46,334 37,815
__________________________________________________________________________
MINORITY INTERESTS 582 452
__________________________________________________________________________
SHAREOWNERS' EQUITY
Common shares par value $1 per share 1,352 1,340
Authorized shares: 2,000,000,000
Outstanding shares: 1,352,398,000 at December 31, 1993;
1,339,831,000 at December 31, 1992
Additional paid-in capital 12,028 11,425
Guaranteed ESOP obligation (355) (407)
Foreign currency translation adjustments (32) 65
Retained earnings 857 6,498
__________________________________________________________________________
TOTAL SHAREOWNERS' EQUITY 13,850 18,921
__________________________________________________________________________
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $60,766 $57,188
==========================================================================
The notes on pages 34 through 43 are an integral part of the consolidated
financial statements. *(Page numbers refer to the Company's Annual Report
to security holders.)
-32-<PAGE>
<PAGE> 24
CONSOLIDATED AT&T AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS Years ended December 31
Dollars in millions 1993 1992 1991
==========================================================================
OPERATING ACTIVITIES
Net income $(3,794) $ 3,807 $ 522
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effects of accounting changes 7,768 - -
Depreciation 3,626 3,540 3,568
Provision for uncollectibles 1,635 1,945 1,233
Provisions for business restructuring 498 64 3,572
(Increase) in accounts receivable (2,082) (1,489) (2,108)
(Increase) decrease in inventories (540) 551 (59)
(Decrease) increase in accounts payable (331) 30 109
Net (increase) in other operating
assets and liabilities (52) (1,084) (1,382)
Other adjustments for non-cash items-net 401 510 560
__________________________________________________________________________
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,129 7,874 6,015
__________________________________________________________________________
INVESTING ACTIVITIES
Capital expenditures net of proceeds from
sale or disposal of property, plant and
equipment of $241, $250 and $119 (3,701) (3,933) (3,860)
Increase in finance receivables, net of
lease-related repayments of $3,633,
$4,325 and $3,521 (3,483) (3,878) (3,052)
Net (increase) decrease in investments (540) (12) 473
Acquisitions, net of cash acquired (414) (202) (29)
Other investing activities-net (201) (167) 69
__________________________________________________________________________
NET CASH USED IN INVESTING ACTIVITIES (8,339) (8,192) (6,399)
__________________________________________________________________________
FINANCING ACTIVITIES
Proceeds from long-term debt issuance 2,456 2,928 1,300
Retirements of long-term debt (3,483) (3,684) (1,196)
Issuance of common shares 619 689 1,164
Dividends paid (1,774) (1,748) (1,563)
Increase in short-term borrowings-net 2,586 1,341 969
Other financing activities-net 25 (72) 2
__________________________________________________________________________
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 429 (546) 676
__________________________________________________________________________
Effect of exchange rate changes on cash 3 26 (19)
__________________________________________________________________________
Net (decrease) increase in cash and
temporary cash investments (778) (838) 273
Cash and temporary cash investments at
beginning of year 1,310 2,148 1,875
__________________________________________________________________________
Cash and temporary cash investments at
end of year $ 532 $ 1,310 $ 2,148
==========================================================================
The notes on pages 34 through 43 are an integral part of the consolidated
financial statements. *(Page numbers refer to the Company's Annual Report
to security holders.)
-33-<PAGE>
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN TELEPHONE AND
TELEGRAPH COMPANY (AT&T)
AND SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................
CONSOLIDATION
Ownership of affiliates Accounting method
_____________________________________________________________________
More than 50% Fully consolidated
20% to 50% Equity method
Less than 20% Cost method
_____________________________________________________________________
We include the accounts of operations located outside the U.S. on the basis
of their fiscal years, ended either November 30 or December 31.
CURRENCY TRANSLATION
For the business we transact in currencies other than U.S. dollars, we
translate income statement amounts at average exchange rates for the year,
and we translate assets and liabilities at year-end exchange rates. We
show the adjustments from balance sheet translation as a separate component
of shareowners' equity.
REVENUE RECOGNITION
Revenue from Basis of recognition
_____________________________________________________________________
Telecommunications Minutes of traffic processed and
Services contracted fees
Products and Systems Upon performance of contractual
obligations
Rentals and Other Proportionately over contract
Services period or as services are
performed
Financial Services Over the life of the finance
and Leasing receivables using the interest
method
_____________________________________________________________________
RESEARCH AND DEVELOPMENT
We expense research and development expenditures as incurred (including
development costs of software that we plan to sell) until technological
feasibility is established. After that time, we capitalize the remaining
software production costs as other assets and amortize them to product
costs over the estimated period of sales.
INTEREST EXPENSE
Interest expense is the interest on short-term and long-term debt and
accrued liabilities, excluding the interest related to our financial
services operations, which is included in cost of financial services and
leasing, and net of interest capitalized in connection with construction.
-34-(Cont'd)<PAGE>
<PAGE> 26
INVESTMENT TAX CREDITS
For financial reporting purposes, we amortize investment tax credits as a
reduction to the provision for income taxes over the useful lives of the
property that produced the credits.
EARNINGS PER SHARE
We use the weighted average number of shares of common stock and common
stock equivalents outstanding during each period to compute earnings per
common share. Common stock equivalents are stock options that we assume to
be exercised for the purposes of this computation.
TEMPORARY CASH INVESTMENTS
We consider temporary cash investments to be cash equivalents for cash flow
reporting purposes. They are highly liquid and have original maturities
generally of three months or less.
INVENTORIES
We state inventories at the lower of cost or market. We determine cost
principally on a first-in, first-out (FIFO) basis.
PROPERTY, PLANT AND EQUIPMENT
We state property, plant and equipment at cost and determine depreciation
using either the group or unit method. The unit method is used primarily
for factory facilities, laboratory equipment, large computer systems, and
certain international earth stations and submarine cables. The group
method is used for most other depreciable assets. When we dispose of
assets that were depreciated using the unit method, we include the gains or
losses in operating results. When we sell or retire plant that was
depreciated using the group method, we deduct the original cost from the
plant account and from accumulated depreciation.
We use accelerated depreciation methods for factory facilities and
digital equipment used in the telecommunications network, except switching
equipment placed in service before 1989. All other plant and equipment is
depreciated on a straight-line basis.
GOODWILL
Goodwill is the difference between the purchase price and the fair value of
net assets acquired in business combinations treated as purchases. We
amortize goodwill on a straight-line basis over the periods benefited,
principally in the range of 10 to 15 years.
RECLASSIFICATIONS
We reclassified certain amounts for previous years to conform with the 1993
presentation.
-34-<PAGE>
<PAGE> 27
2. CHANGES IN ACCOUNTING PRINCIPLES ......................................
POSTRETIREMENT BENEFITS
We adopted Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
effective January 1, 1993. This standard requires us to accrue estimated
future retiree benefits during the years employees are working and
accumulating these benefits. Previously, we expensed health care benefits
as claims were incurred and life insurance benefits as plans were funded.
When we adopted the new standard, we had an accumulated liability
related to past service from retirees and active employees. A portion of
that liability was provided for by group life insurance benefits and trusts
for health care benefits funded before 1993.
We also reimburse the divested regional Bell companies for a portion
of their costs to provide health care benefits, increases in pensions and
other benefits to predivestiture retirees under the terms of the
Divestiture Plan of Reorganization. Through 1992 we expensed these
reimbursements as incurred. In January 1993 we recognized this liability
in connection with the adoption of SFAS No. 106.
We elected to record a one-time pretax charge of $11,317 million to
record the unfunded portions of these liabilities. That charge reflects
$12,986 million of liabilities less $1,669 million of plan assets and
amounts previously recorded. After taxes, that charge was $7,023 million
($5.19 per share), including $1,375 million for predivestiture retirees.
Apart from these cumulative effects on prior years of the accounting
change, our change in accounting had no material effect on net income in
1993 and is not expected to affect net income materially in future periods.
This change does not affect cash flows.
POSTEMPLOYMENT BENEFITS
We also adopted SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," effective January 1, 1993. Analogous to SFAS No. 106, this
standard requires us to accrue for estimated future postemployment
benefits, including separation payments, during the years employees are
working and accumulating these benefits, and for disability payments when
the disabilities occur. Before this change in accounting, we recognized
costs for separations when they were identified and disability benefits
when they were paid.
When we adopted the new standard, we had an accumulated liability for
payments to employees who were then disabled and for benefits related to
the past service of active employees. We recorded a one-time pretax charge
of $1,809 million to record the unprovided portion of these liabilities.
That charge reflects $2,221 million of liabilities less $412 million of
reserves for business restructuring activities that were established before
1993 and reclassified to postemployment liabilities as part of this
accounting change. After taxes, that charge was $1,128 million ($0.83 per
share). The change in accounting reduced operating income by $301 million,
and net income by $171 million ($0.13 per share) in 1993. This change does
not affect cash flows.
-35-(Cont'd)<PAGE>
<PAGE> 28
INCOME TAXES
We also adopted SFAS No. 109, "Accounting for Income Taxes," effective
January 1, 1993. Among other provisions, this standard requires us to
compute deferred tax accounts using the enacted corporate income tax rates
for the years in which the taxes will be paid or refunds received. Before
1993 our deferred tax accounts reflected the rates in effect when we made
the deferrals.
Because corporate income tax rates in 1993 were lower than the rates
that existed before the 1986 Tax Act, our adoption of the new standard
raised net income by $383 million ($0.28 per share). Apart from this
benefit, the new accounting method had no material effect on net income in
1993. Unless Congress changes tax rates, we do not expect this change to
affect net income materially in future periods. This change does not affect
cash flows.
3. PROSPECTIVE ACCOUNTING CHANGES ........................................
DEBT AND EQUITY SECURITIES
In 1994 we must adopt SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." This standard addresses the accounting and
reporting for investments in equity securities that have readily
determinable fair values and for all investments in debt securities. We do
not expect this new standard to affect net income materially at or after
adoption, and it will not affect cash flows.
IMPAIRED LOANS
By 1995 we must adopt SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan." This standard requires us to compute present values for
impaired loans when determining our allowances for credit losses. We do
not expect this new standard to affect net income materially at or after
adoption, and it will not affect cash flows.
4. PROSPECTIVE MERGER WITH MCCAW CELLULAR COMMUNICATIONS, INC. (MCCAW) ...
On August 16, 1993 AT&T and McCaw entered into a definitive agreement to
merge McCaw and a subsidiary of AT&T, making McCaw a wholly owned
subsidiary of AT&T.
In the merger, each share of McCaw's Class A and Class B common stock
will be converted into one share of AT&T common stock. However, if the 20-
day-average market price of the AT&T common stock as of five business days
before the merger is less than $53 per share, the conversion ratio will be
adjusted upward to provide shares of AT&T common stock having an aggregate
market price of $53 for each share of McCaw common stock, subject to a
maximum of 1.111 shares of AT&T common stock. If the 20-day-average market
price of AT&T common stock as of five business days before the merger is
greater than $71.73 per share, the conversion ratio will be adjusted
downward to provide shares of AT&T common stock having an aggregate market
price of $71.73 for each share of McCaw common stock, subject to a minimum
of .909 of a share of AT&T common stock.
Pursuant to a separate agreement, AT&T has granted McCaw the right, in
the event the merger does not close, to require AT&T to purchase from McCaw
$600 million of McCaw's Class A common stock at a price of $51.25 per
share.
-35-<PAGE>
<PAGE> 29
The merger is subject to a number of conditions, including the receipt
of regulatory approvals, expiration of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act (HSR Act), receipt of opinions that
the merger will be tax free and will be accounted for as a pooling of
interests, and McCaw stockholder approval. McCaw stockholders holding a
majority of the voting power of the McCaw common stock, including members
of the McCaw family and British Telecommunications plc, have agreed to vote
in favor of the merger.
The waiting period under the HSR Act will not expire until 20 days
after AT&T and McCaw have substantially complied with a September 1993
request from the U.S. Department of Justice (DOJ) for additional
information and documents.
In August 1993 AT&T and McCaw filed applications seeking consent of
the FCC to the proposed transfer of control of McCaw's radio licenses to
AT&T. A number of AT&T's competitors have sought to have conditions
imposed on the merger or to deny FCC consent. Final comments were filed in
January 1994.
AT&T and McCaw filed applications with nine state regulatory
commissions seeking approval or a statement of non-opposition to the
merger. All of the states, except California have done so. In California,
AT&T and McCaw entered into a settlement agreement with the original
opposing parties regarding the provision of cellular and interexchange
services in that state. In January 1994 AT&T and McCaw filed a reply to
objections to the settlement.
BellSouth Corp. (BellSouth) filed a motion in federal court in
December 1993 contending that AT&T requires a waiver of the antitrust
consent decree to proceed with the merger. In January 1994 the DOJ filed a
response that supported that motion in part. AT&T is seeking expedited
determination of the issues raised by BellSouth's motion or, alternatively,
an expedited waiver of any relevant decree provisions.
5. SUPPLEMENTARY FINANCIAL INFORMATION ...................................
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Dollars in millions 1993 1992 1991
====================================================================
INCLUDED IN COSTS OF PRODUCTS AND SYSTEMS
Amortization of software production costs $ 359 $ 315 $ 311
====================================================================
COSTS OF FINANCIAL SERVICES AND LEASING
Interest expense $ 506 $ 485 $ 445
Depreciation, allowance for losses, etc. 1,205 825 626
____________________________________________________________________
Costs of financial services and leasing $1,711 $1,310 $1,071
====================================================================
INCLUDED IN SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Amortization of goodwill $ 76 $ 68 $ 52
====================================================================
OTHER INCOME-NET
Interest income $ 119 $ 149 $ 170
Royalties and dividends 59 48 55
Earnings applicable to minority interests (9) 56 (1)
Miscellaneous-net 372 99 (16)
____________________________________________________________________
Other income-net $ 541 $ 352 $ 208
====================================================================
DEDUCTED FROM INTEREST EXPENSE
Capitalized interest $ 72 $ 62 $ 79
====================================================================
-36-(Cont'd)<PAGE>
<PAGE> 30
SUPPLEMENTARY BALANCE SHEET INFORMATION
Dollars in millions at December 31 1993 1992
===========================================================
INVENTORIES
Completed goods $ 1,893 $ 1,689
Work in process and raw materials 1,294 970
___________________________________________________________
Inventories $ 3,187 $ 2,659
===========================================================
PROPERTY, PLANT AND EQUIPMENT
Land and improvements $ 746 $ 690
Buildings and improvements 8,512 8,243
Machinery, electronic and other equipment 31,635 31,117
___________________________________________________________
Total property, plant and equipment 40,893 40,050
Less: Accumulated depreciation 21,496 20,692
___________________________________________________________
Property, plant and equipment-net $19,397 $19,358
===========================================================
INVESTMENTS
Accounted for by the equity method $ 698 $ 627
Stated at lower of cost or market 805 237
___________________________________________________________
Investments $ 1,503 $ 864
===========================================================
OTHER ASSETS
Unamortized software production costs $ 413 $ 521
Goodwill, net of accumulated amortization 894 766
Prepaid postretirement healthcare costs - 773
Deferred charges and other 1,430 1,269
___________________________________________________________
Other assets $ 2,737 $ 3,329
===========================================================
DEBT MATURING WITHIN ONE YEAR
Commercial paper $ 8,761 $ 6,053
Long-term debt 1,860 1,158
Long-term lease obligations 52 108
Other notes 231 281
___________________________________________________________
Debt maturing within one year $10,904 $ 7,600
===========================================================
-36-<PAGE>
<PAGE> 31
SUPPLEMENTARY CASH FLOW INFORMATION
Dollars in millions 1993 1992 1991
====================================================================
Interest payments net of
amounts capitalized $ 1,284 $ 1,118 $ 1,058
Income tax payments 1,675 697 1,308
====================================================================
The following table displays the non-cash items excluded from the
consolidated statements of cash flows:
Dollars in millions 1993 1992 1991
====================================================================
Machinery and equipment acquired under
capital lease obligations $ 15 $ 60 $ 114
====================================================================
EXCHANGE OF STOCK
Net assets $ (43) - -
Investments 260 - -
____________________________________________________________________
$ 217 - -
====================================================================
ACQUISITION ACTIVITIES
Net receivables $ 12 $ 130 $ 3
Inventories 1 48 5
Property, plant and equipment 139 76 36
Accounts payable (7) (37) (30)
Short- and long-term debt (3) (93) (4)
Other operating assets and liabilities-net 272 78 19
____________________________________________________________________
Net non-cash items 414 202 29
Net cash used for acquisitions $ 414 $ 202 $ 29
====================================================================
6. BUSINESS RESTRUCTURING AND OTHER CHARGES...............................
Provisions for business restructuring include the estimated costs of
specific plans to close offices, consolidate facilities, relocate employees
and fulfill contractual obligations, and of other activities involved in
restructuring operations. These provisions also cover separation payments
made as a result of special offers related to defined benefit plans.
Before we changed our accounting for postemployment benefits in 1993, costs
for other types of separation payments were also included in these
provisions.
Our $498 million in provisions for business restructuring in 1993
covered $227 million of costs at AT&T Global Information Solutions
(including, in millions, $137 for special termination benefits, $43 for
closing facilities, $18 for employee relocation, $19 for contractual
obligations and $10 for other related expenses). We also provided $215
million for reengineering customer support functions for telecommunications
services (including, in millions, $55 for employee relocation, $25 for
outplacement costs, $30 for legal contingencies and $105 for closing
facilities, lease terminations and asset abandonments associated with
centralizing support services). The remaining provisions consist of $23
million related to closing plants for manufacturing telecommunications
network systems, and $33 million for employee relocation, outplacement
services and legal liabilities related to restructuring operations that
service the U.S. federal government.
In 1991 we recorded approximately $4.5 billion of business
restructuring and other charges, reducing net income by $2,863 million
($2.21 per share). The charges covered estimated costs of changes in our
computer operations, PBX operations and product distribution processes;
consolidating operations in leased and owned buildings and recognizing
costs of vacant space;
-37-(Cont'd)<PAGE>
<PAGE> 32
eliminating a future subsidy to an Alaskan long distance company; writing
down an investment; and other restructuring-related activities, merger-
related expenses and other charges. We recorded these charges as $3,572
million in provisions for business restructuring; $501 million as selling,
general and administrative expenses; $123 million as cost of products and
systems; and the remainder as other costs and expenses, including other
income - net. Charges included in other accounts in 1991 were primarily for
expenses related to the restructuring activities, writing down impaired
assets and merger-related expenses.
The remaining reserves for separation payments at January 1, 1993,
were included in the cumulative effect of the change in accounting for
postemployment benefits. We believe that the balance of reserves for all
other business restructuring activities, $1,440 million at December 31,
1993, is adequate for the completion of those activities.
7. OTHER INCOME-NET.......................................................
In June 1993 we sold our remaining 77% interest in UNIX System
Laboratories, Inc. to Novell, Inc. (Novell) in exchange for approximately
3% of Novell common stock. Our gain on the sale was $217 million.
We sold our remaining interest in Compagnie Industriali Riunite S.p.A.
in 1993 for a slight gain. We reduced the carrying value of that
investment by $68 million in 1992 and by $218 million in 1991 because of a
sustained decline in its market value.
In 1991 we had a $171 million gain from selling our 19% equity
investment in Sun Microsystems, Inc.
8. SALE OF STOCK BY SUBSIDIARIES ........................................
In August 1993 AT&T Capital Corporation sold 5,750,000 shares of common
stock in an initial public offering and approximately 850,000 shares of
common stock in a management offering. That was about 14% of the shares
outstanding, so our ownership is now about 86%. The shares were sold at
$21.50 per share, yielding net proceeds of $115 million excluding $18
million of recourse loans attributable to the management offering. Because
of these loans, we recorded a $9 million loss on the sale. When the loans
are collected in seven years, we expect to report a net $6 million gain
from this sale of stock.
In 1991 UNIX Systems Laboratories, Inc. sold about 20% of its stock to
other companies to encourage their support for open computing standards.
We had a $43 million gain on that sale. Proceeds from the sale were in
cash and we did not provide for deferred taxes on the gain.
-37-(Cont'd)<PAGE>
<PAGE> 33
9. INCOME TAXES .........................................................
This table shows the principal reasons for the difference between the
effective tax rate and the United States Federal statutory income tax rate:
Dollars in millions 1993 1992 1991
====================================================================
U.S. Federal statutory income tax rate 35% 34% 34%
Federal income tax at statutory rate $2,171 $2,026 $ 300
Amortization of investment tax credits (92) (221) (142)
State and local income taxes, net of
federal income tax effect 247 230 63
Foreign rate differential 45 75 54
Taxes on repatriated and accumulated
foreign income, net of tax credits (20) 67 (12)
Research credits (47) (18) (5)
Capital loss carryforward - (13) 32
Effect of tax rate change on
deferred tax assets (73) - -
Other differences-net (1) 5 71
____________________________________________________________________
Provision for income taxes $2,230 $2,151 $ 361
====================================================================
Effective income tax rate 36.0% 36.1% 40.9%
====================================================================
The U.S. and foreign components of income before income taxes
and the provision for income taxes are presented in this
table:
Dollars in millions 1993 1992 1991
==============================================================
INCOME BEFORE INCOME TAXES
United States $5,906 $5,628 $ 373
Foreign 298 330 510
______________________________________________________________
$6,204 $5,958 $ 883
==============================================================
PROVISION FOR INCOME TAXES
CURRENT
Federal $ 878 $ 503 $ 820
State and local 200 124 192
Foreign 169 215 302
______________________________________________________________
1,247 842 1,314
______________________________________________________________
DEFERRED
Federal 924 1,387 (829)
State and local 180 225 (96)
Foreign (41) (85) 140
______________________________________________________________
1,063 1,527 (785)
______________________________________________________________
Deferred investment tax
credits-net* (80) (218) (168)
______________________________________________________________
Provision for income taxes $2,230 $2,151 $ 361
==============================================================
* Net of amortization of $92 in 1993, $221 in 1992 and $142 in
1991.
Deferred tax liabilities are taxes we expect to pay in future
periods. Similarly, deferred tax assets are taxes we expect to
get refunded in future periods. Deferred taxes arise because of
differences in the book and tax bases of certain assets and
liabilities.
-37-<PAGE>
<PAGE> 34
This table shows the December 31, 1993 amounts of deferred
tax assets and liabilities, which include the effects of our
January 1, 1993 accounting changes:
Dollars in millions Assets Liabilities
==============================================================
Property, plant and equipment $ - $3,492
Business restructuring charges 666 -
Employee, postretirement and
postemployment benefits 4,056 56
Reserves and allowances 1,053 -
Unamortized investment tax credits 119 -
Other 152 494
Valuation allowance (201) -
______________________________________________________________
Deferred income taxes $5,845 $4,042
==============================================================
Prior year financial statements were not restated to reflect
the new accounting standards. This table shows the principal
sources of deferred taxes in prior years:
Dollars in millions 1992 1991
==============================================================
Property, plant and equipment $ 929 $ 511
Business restructuring charges 218 (1,103)
Employee pensions and other benefits 234 (26)
Reserves and allowances 108 (208)
Other timing differences-net 38 41
______________________________________________________________
Deferred income taxes $1,527 $ (785)
==============================================================
10. LEASES ...............................................................
AS LESSOR
We provide financing on sales of our products and those of other
companies and lease our products to customers under sales-type
leases. This table displays our net investment in direct financing
and sales-type leases:
Dollars in millions at December 31 1993 1992
===========================================================
Minimum lease payments receivable $4,226 $3,780
Estimated unguaranteed residual values 543 484
Unearned income (797) (736)
Allowance for credit losses (110) (91)
___________________________________________________________
Net investment $3,862 $3,437
===========================================================
This table shows the scheduled maturities of the $4,226
million minimum lease payments receivable on these leases at
December 31, 1993:
1994 1995 1996 1997 1998 Later Years
===========================================================
$1,434 $1,080 $797 $489 $234 $192
===========================================================
-38-(Cont'd)<PAGE>
<PAGE> 35
We lease airplanes, energy-producing facilities and transportation
equipment under leveraged leases having original terms ranging from 10 to
30 years, expiring in various years from 1994 through 2020. This table
shows our net investment in leveraged leases:
Dollars in millions at December 31 1993 1992
===========================================================
Rentals receivable (net of principal
and interest on non-recourse notes) $1,010 $1,021
Estimated residual value
of leased property 782 784
Unearned and deferred income (537) (626)
Allowance for credit losses (22) (19)
___________________________________________________________
Investment in leveraged leases 1,233 1,160
Deferred taxes (994) (719)
___________________________________________________________
Net investment $ 239 $ 441
===========================================================
We lease equipment to others through operating leases, the
majority of which are cancelable. This table shows our net
investment in operating leases:
Dollars in millions at December 31 1993 1992
===========================================================
Machinery, electronic and other equipment $2,694 $2,839
Less: Accumulated depreciation 1,230 1,364
___________________________________________________________
Net investment $1,464 $1,475
===========================================================
This table shows the $557 million of future minimum rentals
receivable under noncancelable operating leases at
December 31, 1993:
1994 1995 1996 1997 1998 Later Years
===========================================================
$251 $157 $83 $32 $11 $23
===========================================================
AS LESSEE
We lease land, buildings and equipment through contracts that expire
in various years through 2025. Our rental expense under operating
leases, in millions, was $1,041 in 1993, $1,121 in 1992 and $1,461 in
1991. The table below shows our future minimum lease payments due
under noncancelable leases at December 31, 1993. Such payments total
$3,004 million for operating leases. The net present value of such
payments on capital leases was $163 million after deducting estimated
executory costs of $1 million and imputed interest of $23 million.
1994 1995 1996 1997 1998 Later Years
=====================================================================
Operating
leases $650 $488 $328 $281 $225 $1,032
Capital
leases 91 44 22 17 8 5
_____________________________________________________________________
Minimum lease
payments $741 $532 $350 $298 $233 $1,037
=====================================================================
-38-<PAGE>
<PAGE> 36
11. SHAREOWNERS' EQUITY ..................................................
Foreign
Additional Currency
Common Paid-in Translation Retained
Dollars in millions Shares Capital Adjustments Earnings
=====================================================================
At December 31, 1990 $1,275 $ 9,497 $ 50 $ 5,580
1991
Net income - - - 522
Dividends declared - - - (1,612)
Shares issued:
Under employee plans 6 120 - 34
Under shareowner plans 11 381 - -
In private placement 18 629 - -
Shares repurchased (1) (3) - (20)
Translation adjustments - - 108 -
Other changes - - - 95
_____________________________________________________________________
At December 31, 1991 1,309 10,624 158 4,599
1992
Net income - - - 3,807
Dividends declared - - - (1,759)
Shares issued:
Under employee plans 10 298 - -
Under shareowner plans 10 402 - -
For merger with Teradata 11 103 - -
Teradata balance recorded - - - (178)
Shares repurchased - (2) - -
Translation adjustments - - (93) -
Other changes - - - 29
_____________________________________________________________________
At December 31, 1992 1,340 11,425 65 6,498
1993
Net income - - - (3,794)
Dividends declared - - - (1,780)
Shares issued:
Under employee plans 4 157 - -
Under shareowner plans 8 450 - -
Shares repurchased - (4) - -
Translation adjustments - - (97) -
Other changes - - - (67)
_____________________________________________________________________
At December 31, 1993 $1,352 $12,028 $ (32) $ 857
=====================================================================
In 1992 we recorded the retained earnings of Teradata Corporation
(Teradata) as of January 1, after making adjustments associated with the
merger. In September 1991 NCR Corporation (NCR) issued 6.3 million shares
of NCR common stock in connection with the merger with AT&T. The shares
were converted into approximately 17.9 million shares of our common stock
upon consummation of the merger.
In March 1990 we issued 13.4 million new shares of common stock in
connection with the establishment of an ESOP feature for the non-management
savings plan. The shares are being allocated to plan participants over ten
years commencing in July 1990 as contributions are made to the plan.
We have 100 million authorized shares of preferred stock at $1 par
value. No preferred stock is currently issued or outstanding.
-39-(Cont'd)<PAGE>
<PAGE> 37
12. LONG-TERM DEBT OBLIGATIONS ...........................................
This table shows the outstanding long-term debt obligations in
millions at December 31:
Interest Rates Maturities 1993 1992
===================================================================
DEBENTURES
4 3/8% to 4 3/4% 1996-1999 $ 750 $ 750
5 1/8% to 7 1/8% 2000-2001 500 1,673
8 1/8% to 9% 2022-2031 1,676 2,576
NOTES
4 1/4% to 7 3/4% 1994-2004 3,605 2,515
7 4/5% to 8 19/20% 1994-2006 445 740
9% to 12 7/8% 1994-2020 616 1,036
Variable rate 1994-1999 923 191
___________________________________________________________________
8,515 9,481
Long-term lease obligations 163 302
Other 89 148
Less: Unamortized discount-net 43 61
___________________________________________________________________
8,724 9,870
Less: Amounts maturing within one year 1,912 1,266
___________________________________________________________________
Total long-term obligations $6,812 $8,604
===================================================================
This table shows the maturities, at December 31, 1993, of the
$8,515 million in debentures and notes:
1994 1995 1996 1997 1998 Later Years
===================================================================
$1,860 $1,245 $902 $198 $665 $3,645
===================================================================
A consortium of lenders provides revolving credit facilities of $6
billion to AT&T and $2 billion to AT&T Capital Corp. (AT&T Capital). These
facilities are intended for general corporate purposes, which include
support for AT&T's and AT&T Capital's commercial paper. They were unused
at December 31, 1993.
13. EMPLOYEE BENEFIT PLANS ...............................................
PENSION PLANS
We sponsor non-contributory defined benefit plans covering the majority of
our employees. Benefits for management employees are principally based on
career-average pay. Benefits for occupational employees are not directly
pay-related.
Pension contributions are principally determined using the aggregate
cost method and are primarily made to trust funds held for the sole benefit
of plan participants. We compute pension cost using the projected unit
credit method and assumed a long-term rate of return on plan assets of 9.0%
in 1993, 9.0% in 1992 and 8.6% in 1991. Pension cost includes the following
components:
-39-<PAGE>
<PAGE> 38
Dollars in millions 1993 1992 1991
====================================================================
Service cost-benefits earned during
the period $ 536 $ 452 $ 303
Interest cost on projected benefit
obligation 2,294 2,225 2,136
Amortization of unrecognized prior
service costs 251 346 310
Credit for expected return on plan
assets* (3,108) (2,973) (2,728)
Amortization of transition asset (502) (502) (502)
Charges for special pension options 74 11 108
____________________________________________________________________
Net pension cost (credit) $ (455) $ (441) $ (373)
====================================================================
*The actual return on plan assets was $5,068 in 1993, $2,153 in 1992
and $6,980 in 1991.
This table shows the funded status of the defined benefit plans:
Dollars in millions at December 31 1993 1992
====================================================================
Actuarial present value of accumulated
benefit obligation, including vested benefits
of $28,119 and $24,818, respectively $30,943 $27,316
====================================================================
Plan assets at fair value $41,481 $38,767
Less: Actuarial present value of projected
benefit obligation 32,680 28,719
____________________________________________________________________
Excess of assets over projected benefit obligation 8,801 10,048
Unrecognized prior service costs 2,052 2,200
Unrecognized transition asset (3,960) (4,463)
Unrecognized net gain (3,513) (4,613)
Net minimum liability of non-qualified plans (72) (45)
____________________________________________________________________
Prepaid pension costs $ 3,308 $ 3,127
====================================================================
We used these rates and assumptions to calculate the projected
benefit obligation:
At December 31 1993 1992
====================================================================
Weighted-average discount rate 7.5% 8.3%
Rate of increase in future
compensation levels 5.0% 5.0%
____________________________________________________________________
The prepaid pension costs shown above are net of pension liabilities
for plans where accumulated plan benefits exceed assets. Such liabilities
are included in other liabilities in the consolidated balance sheets.
We are amortizing over approximately 15.9 years the unrecognized
transition asset related to our 1986 adoption of SFAS No. 87, "Employers'
Accounting for Pensions." We amortize prior service costs primarily on a
straight-line basis over the average remaining service period of active
employees. Our plan assets consist primarily of listed stocks (including
$378 million and $451 million of AT&T common stock at December 31, 1993 and
1992, respectively), corporate and governmental debt, real estate
investments, and cash and cash equivalents.
-40-(Cont'd)<PAGE>
<PAGE> 39
SAVINGS PLANS
We sponsor savings plans for the majority of our employees. The plans
allow employees to contribute a portion of their pretax and/or after-tax
income in accordance with specified guidelines. We match a percentage of
the employee contributions up to certain limits. Our contributions in
millions amounted to $347 in 1993, $331 in 1992 and $279 in 1991.
14. POSTRETIREMENT BENEFITS ..............................................
Our benefit plans for retirees include health care benefits, life insurance
coverage and telephone concessions. This table shows the components of the
net postretirement benefit cost:
Dollars in millions 1993
===========================================================
Service cost-benefits earned during the period $ 95
Interest cost on accumulated postretirement
benefit obligation 868
Credit for expected return on plan assets* (180)
Amortization of unrecognized prior service costs 29
Charge for special options 29
___________________________________________________________
Net postretirement benefit cost $841
===========================================================
* The actual return on plan assets was $243.
We did not restate our 1991 and 1992 financial statements to reflect
the change in accounting for retiree benefits. This table shows our actual
postretirement benefit costs on a pay-as-you-go basis in those years:
Dollars in millions at December 31, 1992 1991
=====================================================================
Cost of health care benefits for retirees $532 $532
Cost of life insurance benefits for retirees 3 26
Cost of telephone concessions and other benefits 39 35
Payments to regional Bell companies
for predivestiture retirees 145 125
_____________________________________________________________________
Postretirement benefit cost $719 $718
=====================================================================
We had approximately 142,200 retirees in 1993, 141,200 in 1992 and
138,500 in 1991.
Our plan assets consist primarily of listed stocks, corporate and
governmental debt, cash and cash equivalents and life insurance
contracts. This table shows the funded status of our postretirement
benefit plans reconciled with the amounts recognized in the consolidated
balance sheet:
Dollars in millions at December 31 1993
===========================================================
Accumulated postretirement benefit obligation
Retirees $ 8,928
Fully eligible active plan participants 893
Other active plan participants 2,092
___________________________________________________________
Accumulated postretirement benefit obligation 11,913
Plan assets at fair value 2,900
___________________________________________________________
Unfunded postretirement obligation 9,013
Unrecognized prior service costs 283
Unrecognized net loss 569
___________________________________________________________
Accrued postretirement benefit obligation $ 8,161
===========================================================
-40-<PAGE>
<PAGE> 40
We made these assumptions in valuing our postretirement
benefit obligation at December 31, 1993:
===========================================================
Weighted-average discount rate 7.5%
Expected long-term rate of return
on plan assets 9.0%
Assumed rate of increase in the per
capita cost of covered health care benefits 9.4%
===========================================================
We assumed that the growth in the per capita cost of covered health
care benefits (the health care cost trend rate) would gradually decline
after 1994 to 5.6% by the year 2021 and then remain level. This assumption
greatly affects the amounts reported. To illustrate, increasing the
assumed trend rate by 1% in each year would raise our accumulated
postretirement benefit obligation at December 31, 1993 by $758 million and
our 1993 postretirement benefit costs by $64 million.
15. STOCK OPTIONS ........................................................
In our Long Term Incentive Program, we grant stock options, stock
appreciation rights (SARs), either in tandem with stock options or
free-standing, and other awards. On January 1 of each year, 0.6% of the
outstanding shares of our common stock become available for grant. The
exercise price of any stock option is equal to or greater than the stock
price when the option is granted. When granted in tandem, exercise of an
option or SAR cancels the other to the extent of such exercise. Option
transactions are shown below:
Number of Shares 1993 1992 1991
===================================================================
Balance at January 1 25,588,351 24,877,209 19,657,362
Options assumed in merger
with Teradata - 1,848,642 -
Options granted 4,729,651 4,948,371 8,312,922
Options and SARs exercised (3,994,569) (5,752,053) (2,874,129)
Average price $27.62 $20.44 $19.53
Options forfeited (162,996) (333,818) (218,946)
At December 31:
Options outstanding 26,160,437 25,588,351 24,877,209
Average price $36.78 $32.58 $29.77
Options exercisable 17,942,984 17,832,355 17,713,781
Shares available for grant 19,626,553 16,592,924 13,852,914
===================================================================
During 1993 167,747 SARs were exercised and no SARs were granted. At
December 31, 1993, 925,210 SARs remained unexercised and all of these were
exercisable.
Before our mergers with NCR and Teradata, stock options were granted
under the separate stock option plans of those companies. No new options
can be granted under those plans.
-41-(Cont'd)<PAGE>
<PAGE> 41
16. SEGMENT INFORMATION ..................................................
INDUSTRY SEGMENTS
Our operations in the global information movement and management industry
involve providing long distance telecommunications services, business
information processing systems, and other systems, products and services
that combine communications and computers. Our operations in the financial
services and leasing industry involve direct financing and finance leasing
programs for our products and the products of other companies, leasing
products to customers under operating leases and being in the general-
purpose credit card business. Miscellaneous other activities, including
the distribution of computer equipment through retail outlets, in the
aggregate, represent less than 10% of revenues, operating income and
identifiable assets and are included in the information movement and
management segment. Revenues between industry segments are not material.
Dollars in millions 1993 1992 1991
====================================================================
REVENUES
Information movement and management $64,652 $63,010 $61,705
Financial services and leasing 2,504 1,894 1,384
____________________________________________________________________
$67,156 $64,904 $63,089
====================================================================
OPERATING INCOME
Information movement and management $ 6,509 $ 6,840 $ 2,008
Financial services and leasing 339 193 (34)
Corporate and non-operating (644) (1,075) (1,091)
____________________________________________________________________
Income before income taxes $ 6,204 $ 5,958 $ 883
====================================================================
ASSETS
Information movement and management $43,515 $41,987 $41,307
Financial services and leasing 17,033 14,003 9,809
Corporate assets 934 1,607 2,533
Eliminations (716) (409) (294)
____________________________________________________________________
$60,766 $57,188 $53,355
====================================================================
DEPRECIATION AND AMORTIZATION
Information movement and management $ 3,682 $ 3,541 $ 3,852
Financial services and leasing 431 352 160
====================================================================
CAPITAL EXPENDITURES
Information movement and management $ 3,232 $ 3,286 $ 3,372
Financial services and leasing 457 633 472
____________________________________________________________________
TOTAL LIABILITIES
Financial services and leasing $15,329 $12,250 $ 8,720
====================================================================
-41-(Cont'd)<PAGE>
<PAGE> 42
GEOGRAPHIC SEGMENTS
Transfers between geographic areas are on terms and conditions comparable
with sales to external customers. The methods followed in developing the
geographic area data require the use of estimation techniques and do not
take into account the extent to which product development, manufacturing
and marketing depend upon each other. Thus the information may not be
indicative of results if the geographic areas were independent
organizations.
Dollars in millions 1993 1992 1991
=====================================================================
REVENUES-EXTERNAL CUSTOMERS
United States $61,580 $59,234 $57,647
Other geographic areas 5,576 5,670 5,442
_____________________________________________________________________
$67,156 $64,904 $63,089
=====================================================================
TRANSFERS BETWEEN GEOGRAPHIC AREAS
(ELIMINATED IN CONSOLIDATION)
United States $ 1,374 $ 1,077 $ 870
Other geographic areas 1,125 911 884
_____________________________________________________________________
$ 2,499 $ 1,988 $ 1,754
=====================================================================
OPERATING INCOME
United States $ 7,095 $ 7,081 $ 1,578
Other geographic areas (247) (48) 396
Corporate and non-operating (644) (1,075) (1,091)
_____________________________________________________________________
Income before income taxes $ 6,204 $ 5,958 $ 883
=====================================================================
ASSETS
United States $54,738 $51,735 $46,863
Other geographic areas 6,901 5,373 4,931
Corporate assets 934 1,607 2,533
Eliminations (1,807) (1,527) (972)
_____________________________________________________________________
$60,766 $57,188 $53,355
=====================================================================
Data on other geographic areas pertain to operations that are located
outside of the U.S. Our revenues from all international activities,
including those in the table, international telecommunications services and
exports, provided 25.2% of consolidated revenues in 1993.
Business restructuring and other charges were taken primarily in the
information movement and management segment and the U.S. geographic area.
Corporate assets are principally cash and temporary cash investments.
17. FINANCIAL INSTRUMENTS ................................................
We use various financial instruments in the normal course of our business.
By their nature all such instruments involve risk, and our maximum
potential loss may exceed the amount recognized in our balance sheet. As
is customary for these types of instruments, we usually do not require
collateral or other security from other parties to these instruments.
However, because we control our exposure to credit risk through credit
approvals, credit limits and monitoring procedures, we believe that our
reserves for losses are adequate.
-41-<PAGE>
<PAGE> 43
COMMITMENTS TO EXTEND CREDIT
We participate in the general-purpose credit card business through AT&T
Universal Card Services Corp., a wholly owned subsidiary. We purchase
essentially all cardholder receivables under an agreement with the
Universal Bank, a subsidiary of Synovus Financial Corporation, which issues
the cards.
LETTERS OF CREDIT
Letters of credit are purchased guarantees that ensure our performance or
payment to third parties in accordance with specified terms and conditions.
GUARANTEES OF DEBT
From time to time, we guarantee the financing for product purchases by
customers outside the U.S., and the debt of certain unconsolidated joint
ventures.
INTEREST RATE SWAP AGREEMENTS
We enter into interest rate swap agreements to manage our exposure to
changes in interest rates. The agreements generally involve the exchange
of fixed or floating interest payments without the exchange of the
underlying principal amounts.
FOREIGN EXCHANGE CONTRACTS
We enter into foreign currency exchange contracts, including forward,
option and swap contracts, to manage our exposure to changes in currency
exchange rates.
FAIR VALUES OF FINANCIAL INSTRUMENTS
Financial instrument Valuation method
=====================================================================
Universal Card finance receivables Carrying amounts. These accrue
interest at a prime-based rate.
All other finance receivables Future cash flows discounted at
market rates.
Debt excluding capital leases Market quotes or based on rates
available to us for debt with
similar terms and maturities.
Commitments to extend credit Receivables we would need to
purchase if all Universal Card
accounts were used up to their
full credit limits.
Letters of credit Fees paid to obtain the
obligations.
Guarantees of debt Costs to terminate agreements.
Interest rate swap agreements Costs to terminate agreements.
Foreign exchange contracts Market quotes.
=====================================================================
-42-(Cont'd)<PAGE>
<PAGE> 44
The table below shows the carrying or contract/notional amounts and
estimated fair values of material financial instruments used in the
normal course of our business.
Dollars in millions 1993 1992
=====================================================================
CARRYING FAIR Carrying Fair
AMOUNT VALUE Amount Value
=====================================================================
ON BALANCE SHEET
Finance receivables
other than leases $10,320 $10,337 $ 7,798 $ 7,803
Debt excluding capital leases 17,553 17,883 15,902 16,126
=====================================================================
CONTRACT/ Contract/
NOTIONAL Notional
AMOUNT Amount
=====================================================================
OFF BALANCE SHEET*
Commitments to extend credit $64,864 $39,934
Letters of credit 680 455
Guarantees of debt 455 271
Interest rate swap agreements 3,685 1,713
Foreign exchange:
Forward contracts 783 972
Swap contracts 361 369
Option contracts - 35
=====================================================================
*The fair values of off-balance-sheet instruments are negligible.
18. CONTINGENCIES ........................................................
In the normal course of business we are subject to proceedings, lawsuits
and other claims, including proceedings under government laws and
regulations related to environmental and other matters. Such matters are
subject to many uncertainties, and outcomes are not predictable with
assurance. Consequently, we are unable to ascertain the ultimate aggregate
amount of monetary liability or financial impact with respect to these
matters at December 31, 1993. While these matters could affect the
operating results of any one quarter when resolved in future periods, we
believe that after final disposition, any monetary liability or financial
impact to us beyond that provided for at year-end would not be material to
our annual consolidated financial statements.
19. AT&T CREDIT HOLDINGS, INC. ...........................................
In connection with the March 31, 1993 legal restructuring of AT&T Capital
Holdings, Inc. (formerly AT&T Capital Corporation), we issued a direct,
full and unconditional guarantee of all the outstanding public debt of AT&T
Credit Holdings, Inc. (formerly AT&T Credit Corporation).
AT&T Credit Holdings, Inc. holds the majority of AT&T's investment in
AT&T Capital Corporation and the lease finance assets of the former AT&T
Credit Corporation. The table below shows summarized consolidated
financial information for AT&T Credit Holdings, Inc., which consolidates
the accounts of AT&T Capital Corporation. Financial information for prior
periods was restated for the legal restructuring. The summarized financial
information includes transactions with AT&T that are eliminated in
consolidation.
-42-<PAGE>
<PAGE> 45
Dollars in millions 1993 1992
===============================================================
Total revenue $1,432 $1,351
Interest expense 284 293
Operating and administrative expense 384 375
Income before cumulative effect of
change in accounting 70 100
Cumulative effect of change in
accounting (SFAS No. 109) 22 -
Net income 48 100
===============================================================
Finance receivables $6,220 $5,565
Net investment in operating lease assets 978 1,099
Total assets 7,886 7,252
Total debt 4,639 4,633
Total liabilities 6,867 6,422
Minority interest 251 110
Total shareowner's equity 768 720
===============================================================
20. QUARTERLY INFORMATION (UNAUDITED) ....................................
Quarters-Dollars in millions FIRST SECOND THIRD FOURTH
==================================================================
1993
Total revenues $15,719 $16,316 $16,662 $18,459
Gross margin 6,202 6,547 6,581 7,257
Income before cumulative
effects of accounting
changes 936 1,005 1,051 982
Net income (loss) (6,832) 1,005 1,051 982
Per common share:
Income before cumulative
effects of accounting
changes .69 .74 .78 .72
Net income (loss) (5.07) .74 .78 .72
Dividends declared .33 .33 .33 .33
Stock price*:
High 59 1/8 63 7/8 65 61 3/8
Low 50 1/8 53 3/4 57 3/8 52
Quarter-end close 56 3/4 63 58 7/8 52 1/2
==================================================================
1992
Total revenues $15,375 $15,845 $16,180 $17,504
Gross margin 5,912 6,185 6,269 6,828
Net income 883 961 963 1,000
Per common share:
Net Income .67 .72 .72 .75
Dividends declared .33 .33 .33 .33
Stock price*:
High 41 3/8 44 5/8 45 3/8 53 1/8
Low 36 5/8 40 1/8 42 40 5/8
Quarter-end close 40 3/4 43 43 5/8 51
===================================================================
* Stock prices obtained from the Composite Tape.
The number of weighted average shares outstanding increases as we issue new
common shares for employee plans, shareowner plans and other purposes. For
this reason, the sum of quarterly earnings per common share may not be the
same as earnings per common share for the year, and the per share effects
of unusual items in a quarter may differ from the per share effects of
those same items for the year.
-43-(Cont'd)<PAGE>
<PAGE> 46
In the second quarter of 1993, we recorded $278 million in provisions
for business restructuring activities. The effect of these provisions was
offset by the $217 million gain from selling UNIX System Laboratories, Inc.
and other miscellaneous credits. In the fourth quarter of 1993, we
recorded a $190 million provision for business restructuring at AT&T Global
Information Solutions, which reduced net income by $119 million ($0.09 per
share).
As a result of adopting SFAS No. 112, data for the first three
quarters of 1993 were restated. The following table shows the net effects
of this accounting change, which represent the differences between the
amounts shown and the amounts originally reported:
Quarters-Dollars in millions First Second Third
=====================================================================
Gross margin $ (39) $ (39) $ (42)
Income before cumulative effects
of accounting changes (60) (39) (22)
Cumulative effect of
accounting change (1,128) - -
Net income (loss) (1,188) (39) (22)
Per common share:
Income before cumulative effects
of accounting changes (.05) (.03) (.02)
Cumulative effect of
accounting change (.83) - -
Net income (loss) (.88) (.03) (.02)
=====================================================================
-43-<PAGE>
<PAGE> 47
BOARD OF DIRECTORS
ROBERT E. ALLEN, 58
Chairman of the Board and Chief Executive Officer of AT&T since
1988. Director since 1984. 6,8
M. KATHRYN EICKHOFF, 54
President of Eickhoff Economics, Inc., a business consulting
firm. Elected to Board in 1987. 3,5
WALTER Y. ELISHA, 61
Chairman and Chief Executive Officer of Springs Industries,
Inc., a textile manufacturing firm. Director since 1987. 2,4,7
Phillip M. Hawley, 68
Retired Chairman and Chief Executive Officer of Carter Hawley
Hale Stores, Inc., retail department stores. Director since
1982. 2,3,4
CARLA A. HILLS, 59
Chairman and Chief Executive Officer of Hills & Company
consulting firm and former U.S. Trade Representative. Elected
to Board in 1993. 1,5
BELTON K. JOHNSON, 64
Chairman of Belton K. Johnson Interests. Director since 1974.
3,5,6,8
DREW LEWIS, 62
Chairman and Chief Executive Officer of Union Pacific Corp., a
transportation, natural resources and environmental services
company. Elected to Board in 1989. 1,2,5
DONALD F. McHENRY, 57
President of IRC Group, international relations consultants;
educator and former U.S. Ambassador to the United Nations.
Director since 1986. 3,7
VICTOR A. PELSON, 56
Chairman of AT&T Global Operations Team and Executive Vice
President of AT&T. Elected to Board in 1993.
DONALD S. PERKINS, 66
Retired Chairman and Chief Executive Officer of Jewel Companies,
Inc., a diversified retailer. Director since 1979. 1,2,6,7,8
HENRY B. SCHACHT, 59
Chairman and Chief Executive Officer of Cummins Engine Company,
Inc., manufacturer of diesel engines. Elected to Board in 1981.
1,5
MICHAEL I. SOVERN, 62
President Emeritus and Chancellor Kent Professor of Law at
Columbia University. Director since 1984. 1,4
-44-(Cont'd
<PAGE> 48
FRANKLIN A. THOMAS, 59
President of The Ford Foundation. Elected to Board in 1988.
1,2,5
JOSEPH D. WILLIAMS, 67
Retired Chairman and Chief Executive Officer of Warner-Lambert
Co., a pharmaceutical, health care and consumer products
company. Director since 1984. 4,6,7
THOMAS H. WYMAN, 64
Chairman of S.G. Warburg & Co. Inc., investment bankers.
Director since 1981. 2,4,7
1. Audit Committee 2. Committee on Directors 3. Committee on
Employee Benefits 4. Compensation Committee 5. Corporate Public
Policy Committee 6. Executive Committee 7. Finance Committee 8.
Proxy Committee
OUR THANKS and best wishes go to three people who left our Board
in 1993. Gil Williamson retired as CEO of NCR. Lou Gerstner
became chairman and CEO of IBM. Randy Tobias was elected
chairman and CEO of Eli Lilly and Co. We welcome new Board
members Ambassador Carla Hills and AT&T's Vic Pelson. We expect
that Craig O. McCaw, chairman and chief executive officer of
McCaw Cellular, will join our Board when the merger of our
companies is completed in 1994.
MANAGEMENT EXECUTIVE COMMITTEE
ROBERT E. ALLEN, 58
Chairman of the Board and Chief Executive Officer since 1988.
In 36-year AT&T career, has been chairman of Chesapeake and
Potomac Telephone Companies, AT&T chief financial officer,
chairman and CEO of AT&T Information Systems, and president and
chief operating officer of AT&T.
RICHARD S. BODMAN, 55
Senior Vice President of Corporate Strategy and Development
since 1990. Previously president of Washington National
Investment Corporation and CEO of Comsat General Corporation.
Also held positions at E.I. du Pont de Nemours & Company, in the
federal government and at Touche Ross & Company.
HAROLD W. BURLINGAME, 53
Senior Vice President of Human Resources since 1987. During 32-
year AT&T career, has been vice president of public relations
for AT&T Information Systems and senior vice president of public
relations for the corporation.
ROBERT M. KAVNER*, 50
Executive Vice President and Chief Executive Officer of Multimedia
Products and Services since 1993. Headed AT&T's Communications
Products and Data Systems Groups. Joined AT&T as chief financial
officer in 1984 after 18 years with Coopers & Lybrand.
-44-(Cont'd
<PAGE> 49
MARILYN LAURIE, 54
Senior Vice President of Public Relations and Employee Information
since 1987. Chairman of the AT&T Foundation. Headed public
relations at AT&T Bell Laboratories and AT&T Communications. A
notionally recognized environmentalist, she joined AT&T in 1971.
ALEX J. MANDL*, 50
Executive Vice President and Chief Executive Officer of
Communications Services since 1993. Joined AT&T in 1991 as chief
financial officer. Formerly chairman and CEO of Sea-Land Service,
Inc. Held senior positions at CSX Corporation and Boise Cascade
Corporation.
WILLIAM B. MARX, JR.*, 54
Executive Vice President and Chief Executive Officer of Network
Systems since 1989. Responsible for AT&T's world-wide purchasing
and global manufacturing planning. Joined AT&T in 1961. Held
engineering, sales and marketing positions at the former Western
Electric Company. Headed AT&T Computer Systems from 1986 to 1987.
JOHN S. MAYO, 63
President of AT&T Bell Laboratories since 1991. Joined AT&T in
1955. Headed product development at AT&T Network Systems and was
senior vice president for network systems and network services at
Bell Labs. Recipient of the National Medal of Technology for role
in providing the technological foundation for Information Age
communications.
RICHARD W. MILLER*, 53
Executive Vice President and Chief Financial Officer since 1993.
Formerly chairman and CEO of Wang Laboratories, Inc., senior vice
president and general manager for consumer electronics at General
Electric Company and chief financial officer for RCA.
VICTOR A. PELSON*, 56
Executive Vice President and Chairman of the Global Operations
Team since 1993. Responsible for the effectiveness of AT&T's
operations worldwide. Joined AT&T in 1959 as an engineer. Named
head of Communications Services Group in 1989. Has held executive
positions in virtually every part of the company.
JERRE L. STEAD*, 50
Executive Vice President and Chief Executive Officer of AT&T
Global Information Solutions since 1993. Joined AT&T in 1991 as
president of Global Business Communications Systems. Formerly
chairman and CEO of Square D Company, and held various management
positions at Honeywell, Inc.
SAM R. WILLCOXON, 62
Group Executive of AT&T and President of Telephone Pioneers of
America since 1993. Joined AT&T as an engineer in 1952. Served
as executive vice president of AT&T Communications and Pacific
Telephone and Telegraph Co.
-44-
<PAGE> 50
JOHN D. ZEGLIS, 46
Senior Vice President-General Counsel and Government Affairs since
1986 and 1989, respectively. Joined AT&T in 1984. Formerly a
partner at the law firm of Sidley & Austin.
*Also a member of the Global Operations Team.
The Management Executive Committee leads the development and
implementation of AT&T's mission, values and strategic intent,
while the Global Operations Team is responsible for the
effectiveness of AT&T's operations worldwide.
___________________________________________________________________
ROGER F. DAVIS, 50
Vice President and Controller
S. LAWRENCE PRENDERGAST, 52
Vice President and Treasurer
ROBERT E. SCANNELL, 54
Vice President-Law and Secretary
GENERAL INFORMATION
GENERAL QUESTIONS
General questions or comments about AT&T may be addressed to the
office of Vice President-Law and Secretary at:
AT&T Corporate Headquarters
32 Avenue of the Americas
Room 2420E
New York, NY 10013-2412
FORM 10-K
Form 10-K (AT&T's annual report to the Securities and Exchange
Commission) is available without charge from AT&T Shareowner
Relations at the corporate headquarters address above.
OTHER REPORTS
AT&T Capital Corporation's annual report and Form 10-K are
available without charge by calling 1 800 235-4288, or writing:
AT&T Capital Corporation
Corporate Communications
44 Whippany Road
Morristown, NJ 07962-1983
Report on Corporate Citizenship
AT&T Foundation
Department AR
P.O. Box 45284
Jacksonville, FL 32232-5284
-45-(Cont'd
<PAGE> 51
AT&T Environment and Safety Report
Department AR
131 Morristown Road
Room 1336
Basking Ridge, NJ 07920
HELPFUL INFORMATION FOR INVESTORS
SHAREOWNER SERVICES
First Chicago Trust, our shareowner services and transfer agent,
will be happy to answer questions about your account and help you
with transactions. You may call them toll-free at: 1800 348-8288.
Persons using a telecommunications device for the deaf (TDD) or a
teletypewriter (TTY) may call: 1 800 822-2794.
From outside the United States, call us collect at: 201 324-0293.
Our mailing address is:
AT&T
c/o First Chicago Trust Co. of NY
P.O. Box 2575
Jersey City, NJ 07303-2575
The First Chicago Trust address to which banks and brokers may
deliver certificates for transfer is 14 Wall Street in New York
City.
DIVIDEND REINVESTMENT
The Dividend Reinvestment and Stock Purchase Plan provides owners
of common stock a convenient way to purchase additional shares.
If interested, please call or write First Chicago Trust for a
prospectus and enrollment form.
STREET NAME ACCOUNTS
Shareowners whose stock is held by banks or brokerage firms and
who wish to receive AT&T quarterly reports directly from the
company should contact First Chicago Trust to be placed on the
mailing list.
INVESTOR RELATIONS
Security analysts and other members of the professional financial
community are invited to contact AT&T Corporate Investor Relations
with questions. Call 1 800 972-0784.
STOCK DATA
AT&T is listed on the New York Stock Exchange (ticker symbol "T").
AT&T also is listed on the Boston, Midwest, Pacific and
Philadelphia stock exchanges in the U.S., and on stock
exchanges in Brussels, London, Paris, Geneva and Tokyo.
Shareowners of record (as of December 31, 1993): 2,344,160
1994 ANNUAL MEETING
The 109th Annual Shareowners Meeting will be held 9:30 a.m.,
Wednesday, April 20, 1994, at the Georgia World Congress Center in
Atlanta.
-45-
<PAGE> 52
APPENDIX
On page 26 of the Company's Annual Report to security holders a
pie chart appears containing the following information:
1993 SOURCES OF REVENUES
In Percentages of Total Revenues
8.3% INTERNATIONAL REVENUES -
From operations located in other countries
16.9% INTERNATIONAL REVENUES -
From U.S. operations (international telecommunications
services, and exports)
74.8% U.S. REVENUES
Because we have gained a foothold in many markets that are
growing faster than those in the U.S., we expect international
revenues to contribute strongly to our revenue growth.
On page 29 of the Company's Annual Report to security
holders a pie chart appears containing the following information:
1993 INVESTING ACTIVITIES
In Percentages of $8.3 Billion
Net Cash Flows
44.4% NET CAPITAL EXPENDITURES
Worldwide Intelligent Network
Research and Development facilities
Manufacturing facilities
Other
41.8% NET INCREASE IN FINANCE RECEIVABLES
AT&T Universal Card
AT&T Capital Corp. finance programs
13.8% EQUITY INVESTMENTS AND OTHER
McCaw Communications, Inc.
Unitel Communications, Inc.
Others (e.g.,WorldPartners,
The ImagiNation Network, Inc.,
General Magic Corp.)
Investments in our network, financial operations and alliances
pave the way for further growth in revenues and earnings.
<PAGE>
Exhibit (21)
AT&T Form 10-K
List of Subsidiaries of American Telephone and Telegraph Company
Jurisdiction
of
Incorporation
AT&T Capital Holdings, Inc. ............................ Delaware
AT&T Communications, Inc. .............................. Delaware
AT&T Communications of California, Inc. ................ California
AT&T Communications of Delaware, Inc. .................. Delaware
AT&T Communications of Illinois, Inc. .................. Illinois
AT&T Communications of Indiana, Inc. ................... Indiana
AT&T Communications of Maryland, Inc. .................. Maryland
AT&T Communications of Michigan, Inc. .................. Michigan
AT&T Communications of the Midwest, Inc. ............... Iowa
AT&T Communications of the Mountain States, Inc. ....... Colorado
AT&T Communications of Nevada, Inc. .................... Nevada
AT&T Communications of New England, Inc. ............... New York
AT&T Communications of New Hampshire, Inc. ............. New Hampshire
AT&T Communications of New Jersey, Inc. ................ New Jersey
AT&T Communications of New York, Inc. .................. New York
AT&T Communications of Ohio, Inc. ...................... Ohio
AT&T Communications of the Pacific Northwest, Inc. ..... Washington
AT&T Communications of Pennsylvania, Inc. .............. Pennsylvania
AT&T Communications of the South Central States, Inc. .. Delaware
AT&T Communications of the Southern States, Inc. ....... New York
AT&T Communications of the Southwest, Inc. ............. Delaware
AT&T Communications of Virginia, Inc. .................. Virginia
AT&T Communications of Washington, D.C. Inc. ........... New York
AT&T Communications of West Virginia, Inc. ............. West Virginia
AT&T Communications of Wisconsin, Inc. ................. Wisconsin
AT&T Credit Holdings, Inc. ............................. Delaware
AT&T Global Information Solutions Company .............. Maryland
AT&T International Inc. ................................ Delaware
AT&T Microelectronica de Espana S.A. ................... Spain
AT&T Nassau Metals Corporation ......................... New York
AT&T Network Systems International B.V. ................ Netherlands
AT&T Paradyne Corporation .............................. Delaware
AT&T of Puerto Rico, Inc. .............................. New York
AT&T Resource Management Corporation ................... New York
AT&T Universal Card Services Corp. ..................... Delaware
AT&T of the Virgin Islands, Inc. ....................... Delaware
Actuarial Sciences Associates, Inc. .................... Delaware
American Transtech Inc. ................................ Delaware
Istel Group, Ltd. ...................................... United Kingdom
Teradata Corporation ................................... Delaware
<PAGE> Exhibit (23)
AT&T Form 10-K
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration
statements of American Telephone and Telegraph Company ("AT&T" or the
"Company") on Form S-3 for the Shareowner Dividend Reinvestment and Stock
Purchase Plan (Registration No. 33-49093), Form S-8 for the AT&T 1984 Stock
Option Plan (Registration No. 2-90983), Form S-8 for the AT&T Long Term
Savings and Security Plan (Registration Nos. 33-34265 and 33-31362), Form
S-8 for the AT&T Long Term Savings Plan for Management Employees
(Registration Nos. 33-34264, 33-29256, 33-21937 and 33-14373), Form S-8 for
the AT&T Retirement Savings and Profit Sharing Plan (Registration No.
33-39708), Form S-8 for Shares Issuable Under the Stock Option Plan of the
AT&T 1987 Long Term Incentive Program (Registration No. 33-20276), Form S-8
for the Shares for Growth Program (Registration No. 33-49089), Form S-4 for
the Consent Solicitation Statement/Prospectus (Registration No. 33-52119),
Form S-8 for the NCR Corporation Savings Plan (Registration No. 33-42917),
Form S-8 for the 1992 NCR Employee Stock Purchase Plan (Registration No.
33-48845), Form S-8 for the AT&T Capital Corporation Retirement and Savings
Plan (Registration No. 33-50821), Form S-8 for the AT&T of Puerto Rico,
Inc. Long Term Savings Plan for Management Employees (Registration No. 33-
50819), Form S-8 for the AT&T of Puerto Rico, Inc. Long Term Savings and
Security Plan (Registration No. 33-50817), Form S-8 for the AGCS Savings
Plan (Registration No. 33-50827), Form S-8 for the AGCS Hourly Savings Plan
(Registration No. 33-50829), Form S-3 for the AT&T $2,500,000,000 Notes and
Warrants to Purchase Notes (Registration No. 33-44438), and Form S-3 for
the AT&T $2,600,000,000 Notes and Warrants to Purchase Notes (Registration
No. 33-49589), and in the Post-Effective Amendment Nos. 1, 2 and 3 on Form
S-8 to Form S-4 Registration Statement (Registration No. 33-42150) for the
NCR Corporation 1989 Stock Compensation Plan (Registration No.
33-42150-01), the NCR Corporation 1984 Stock Option Plan (Registration No.
33-42150-02) and the NCR Corporation 1976 Stock Option Plan (Registration
No. 33-42150-03), respectively, the Post-Effective Amendment Nos. 1, 2 and
3 on Form S-8 to Form S-4 Registration Statement (Registration No.
33-26801) for the Eaton Financial Corporation Amended and Restated
Non-Statutory Directors' Stock Option Plan (Registration No. 33-26801-01),
the Eaton Financial Corporation Amended and Restated Employees' Incentive
Stock Option Plan (Registration No. 33-26801-02) and the Eaton Financial
Corporation Amended and Restated 1988 Nonqualified Stock Option Plan
(Registration No. 33-26801-03), respectively, and the Post-Effective
Amendment Nos. 1 and 2 on Form S-8 to Form S-4 Registration Statement
(Registration No. 33-45302) for the Teradata Corporation 1987 Incentive and
Other Stock Option Plan (Registration No. 33-45302-01) and the Teradata
Corporation Directors' Stock Option Plan (Registration No. 33-45302-02),
respectively, of our reports, which include an explanatory paragraph
regarding the change in 1993 in methods of accounting for postretirement
benefits, postemployment benefits and income taxes, dated January 27, 1994,
on our audits of the consolidated financial statements and consolidated
financial statement schedules of the Company and its subsidiaries at
December 31, 1993 and 1992, and for the years ended December 31, 1993, 1992
and 1991, which reports are incorporated by reference or included in this
Annual Report on Form 10-K.
COOPERS & LYBRAND
1301 Avenue of the Americas
New York, New York
March 24, 1994
<PAGE>
Exhibit (24)a
Form 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New
York corporation (hereinafter referred to as the "Company"),
proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act
of 1934, as amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is both an officer and a director
of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him and in his name, place and stead,
and in his capacity as a director of the Company, to execute and
file such annual report, and thereafter to execute and file any
amendment or amendments thereto, hereby giving and granting to
said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully, to all intents and
purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power
of Attorney this 14th day of March, 1994.
R. E. Allen
Chairman of the Board
and Director
<PAGE>
- 2 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is an officer of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him and in his name, place and stead,
and in his capacity as an officer of the Company, to execute and
file such annual report, and thereafter to execute and file any
amendment or amendments thereto, hereby giving and granting to
said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully, to all intents and
purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 11th day of March, 1994.
R. W. Miller
Chief Financial Officer
<PAGE>
- 3 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is an officer of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for her and in her name, place and stead,
and in her capacity as an officer of the Company, to execute and
file such annual report, and thereafter to execute and file any
amendment or amendments thereto, hereby giving and granting to
said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully, to all intents and
purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of March, 1994.
M. B. Tart
Controller
<PAGE>
- 4 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 16th day of March, 1994.
M. Kathryn Eickhoff
Director
<PAGE>
- 5 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 14th day of March, 1994.
Walter Y. Elisha
Director
<PAGE>
- 6 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 16th day of March, 1994.
Philip M. Hawley
Director
<PAGE>
- 7 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 16th day of March, 1994.
Carla A. Hills
Director
<PAGE>
- 8 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 14th day of March, 1994.
Belton K. Johnson
Director
<PAGE>
- 9 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 10th day of March, 1994.
Drew Lewis
Director
<PAGE>
- 10 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 16th day of March, 1994.
Donald McHenry
Director
<PAGE>
- 11 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 12th day of March, 1994.
Victor A. Pelson
Director
<PAGE>
- 12 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 13th day of March, 1994.
Donald S. Perkins
Director
<PAGE>
- 13 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 15th day of March, 1994.
Henry B. Schacht
Director
<PAGE>
- 14 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 14th day of March, 1994.
Michael I. Sovern
Director
<PAGE>
- 15 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 15th day of March, 1994.
Franklin A. Thomas
Director
<PAGE>
- 16 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 12th day of March, 1994.
Joseph D. Williams
Director
<PAGE>
- 17 -
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York
corporation (hereinafter referred to as the "Company"), proposes
to file shortly with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints R. W. MILLER, M. B. TART and S. L. PRENDERGAST, and each
of them, as attorneys for him or her and in his or her name,
place and stead, and in his or her capacity as a director of the
Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto, hereby
giving and granting to said attorneys full power and authority to
do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to
all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 15th day of March, 1994.
Thomas H. Wyman
Director
<PAGE>
Exhibit (24)b
AT&T Form 10-K
Mr. Williams, Chairman of the Finance Committee, reported
that the Finance Committee had met earlier in the day. He
reported that it reviewed matters relating to the proposed filing
by the Company of its Annual Report on Form 10-K for 1993 with
the Securities and Exchange Commission and had voted to recommend
for approval by the Board of Directors the resolution appearing
below. He stated that the Form 10-K must be filed on or before
March 31, 1994. Mr. Williams noted that Securities and Exchange
Commission regulations require that the Form 10-K be signed by
certain officers of the Company and by at least a majority of the
members of the Company's Board of Directors. He also noted that
each of the Board members had been given a power of attorney to
appoint certain officers of the Company as his or her
attorneys-in-fact to execute the Form 10-K on behalf of the
Director.
Whereupon, on motion, it was
RESOLVED: that the form of the Company's Annual Report on
Form 10-K for the year ended December 31, 1993, submitted to the
meeting, is approved, and each of the officers and directors of
the Company signing the Form 10-K is authorized to execute such
report, personally or by attorney-in-fact, in the name of and on
behalf of the Company, and to file such report with the
Securities and Exchange Commission, with such changes therein as
the officers and directors signing such report shall approve,
such approval to be conclusively evidenced by the signing
thereof, and to cause to be filed any amendments or supplements
to the foregoing, and to do all other acts and things, and to
execute, personally or by attorney-in-fact, any and all other
documents necessary or advisable in connection therewith.
